Albireo
Biodel Inc (Form: DEF 14A, Received: 01/18/2008 17:17:37)
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
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 (Amendment No. )
 
Filed by the Registrant þ
Filed by a Party other than the Registrant o
 
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12
 
Biodel Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
þ No fee required.
 
o 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 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
 
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(5)  Total fee paid:
 
 
o Fee paid previously with preliminary materials:
 
 
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
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(2)  Form, Schedule or Registration Statement No.:
 
 
(3)  Filing Party:
 
 
(4)  Date Filed:
 


 

BIODEL LOGO
 
100 Saw Mill Road
Danbury, Connecticut 06810
 
January 18, 2008
 
Dear Stockholder:
 
You are cordially invited to attend the 2008 Annual Meeting of Stockholders of Biodel Inc., which will be held at 10:00 a.m., local time, on Thursday, February 28, 2008, at our corporate headquarters at 100 Saw Mill Road Danbury, Connecticut 06810. The Notice of Annual Meeting and Proxy Statement that accompany this letter describe the matters to be voted on at the Annual Meeting. We hope you will be able to attend and participate in the Annual Meeting.
 
Whether or not you plan to attend, it is important that your shares be represented and voted at the Annual Meeting. If you are a stockholder of record, you may vote your shares by proxy card. If you are a beneficial owner, you may vote your shares by telephone, over the Internet or by proxy card.
 
On behalf of your Board of Directors, I would like to thank you for your continued support and interest in Biodel Inc.
 
Sincerely,
 
    /s/ Solomon S. Steiner
    
Solomon S. Steiner
President and Chief Executive Officer


 

BIODEL INC.
100 SAW MILL ROAD
DANBURY, CONNECTICUT 06810
 
 
Notice of Annual Meeting of Stockholders
to be held on February 28, 2008 at 10:00 a.m.
 
The 2008 Annual Meeting of Stockholders of Biodel Inc. will be held on Thursday, February 28, 2008, at 10:00 a.m., local time, at the corporate headquarters of Biodel, 100 Saw Mill Road, Danbury, Connecticut 06810. The Annual Meeting has been called for the following purposes:
 
1. To elect three Class I directors for a term of three years;
 
2. To ratify the appointment of BDO Seidman, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2008; and
 
3. To transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.
 
Only stockholders of record at the close of business on January 7, 2008 will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.
 
Your vote is very important to us. Whether or not you plan to attend the Annual Meeting in person, your shares should be represented and voted. To vote without attending the Annual Meeting, you should complete, sign, date and promptly return the enclosed proxy card in the postage-paid envelope that we have included for your convenience. Alternatively, if you are a beneficial owner, you may vote through the Internet or by telephone as indicated in the instructions enclosed with your proxy card. No postage is required if you mail your proxy in the United States. Even if you plan to attend the Annual Meeting, we would appreciate receiving your voting instructions before that date. Submitting the proxy before the Annual Meeting will not preclude you from voting in person at the Annual Meeting if you should decide to attend.
 
We are first sending the Notice of Annual Meeting, this Proxy Statement, the enclosed proxy card and our Annual Report to Stockholders for the year ended September 30, 2007 to our stockholders on or about January 22, 2008.
 
All stockholders are invited to attend the Annual Meeting. No ticket is required for admittance. If you have any questions regarding this Notice of Annual Meeting or if you have special needs which require assistance, please call us at (203) 796-5000, and we will be happy to assist you.
 
By Order of the Board of Directors,
 
/s/  R. Timmis Ware
 
R. Timmis Ware
Secretary
 
Danbury, Connecticut
January 18, 2008
 
 
Our 2007 Annual Report accompanies this Proxy Statement.


 

BIODEL INC.
100 SAW MILL ROAD
DANBURY, CONNECTICUT 06810

Annual Meeting of Stockholders
to be held on February 28, 2008 at 10:00 a.m.
 
 
PROXY STATEMENT
 
 
GENERAL INFORMATION
 
This Proxy Statement is furnished in connection with the solicitation by the board of directors of Biodel Inc., also referred to in this Proxy Statement as the “Company,” “Biodel,” “we” or “us,” of proxies to be voted at our 2008 Annual Meeting of Stockholders, or the Annual Meeting, to be held on Thursday, February 28, 2008 at our corporate headquarters at 100 Saw Mill Road, Danbury, Connecticut 06810 at 10:00 a.m., local time, and at any adjournment or adjournments thereof. Stockholders of record of our common stock, $.01 par value per share, as of the close of business on January 7, 2008, will be entitled to notice of and to vote at the Annual Meeting and any adjournment or adjournments thereof. As of that date, there were 20,282,875 shares of our common stock issued and outstanding and entitled to vote. Each share of common stock is entitled to one vote on any matter presented at the Annual Meeting.
 
If proxies in the accompanying form are properly executed and returned, the shares of common stock represented thereby will be voted in the manner specified therein. If not otherwise specified, the shares of common stock represented by the proxies will be voted: (i) FOR, as applicable, the election of the three nominees named below as directors, (ii) FOR the ratification of the appointment of BDO Seidman, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2008; and (iii) in the discretion of the persons named in the enclosed form of proxy, on any other proposals which may properly come before the Annual Meeting or any adjournment or adjournments thereof. Any stockholder who has submitted a proxy may revoke it at any time before it is voted by written notice addressed to and received by our corporate secretary, by submitting a duly executed proxy bearing a later date, or by electing to vote in person at the Annual Meeting. The mere presence at the Annual Meeting of the person appointing a proxy does not, however, revoke the appointment.
 
Voting Procedures
 
Q:   What shares owned by me may be voted?
 
A:   You may only vote the shares of our common stock owned by you as of the close of business on January 7, 2008, which is the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. These shares include the following:
 
  •  shares of common stock held directly in your name as the stockholder of record; and
 
  •  shares of common stock held for you, as the beneficial owner, through a broker, bank or other nominee.
 
Q:   What is the difference between holding shares as a stockholder of record and as a beneficial owner?
 
A:   Most of our stockholders hold their shares through a broker, bank or other nominee, rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
 
If your shares are registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you on our behalf. As the stockholder of record, you have the right to grant your voting proxy to the persons specified on the enclosed proxy card or to vote in person at the Annual Meeting. The persons named in the proxy card will vote the shares you own in accordance


 

with your instructions on the proxy card you mail. If you return the card, but do not give any instructions on a particular matter described in this Proxy Statement, the persons named in the proxy card will vote the shares you own in accordance with the recommendations of our board of directors. We have enclosed a proxy card for you to use.
 
If your shares are held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and the proxy materials are being sent to you by your broker or nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker or nominee how to vote. You are also invited to attend the Annual Meeting, but since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a proxy from your broker or nominee. Your broker or nominee has enclosed a voting instruction card for you to use. If you wish to attend the Annual Meeting and vote in person, please mark the box on the voting instruction card received from your broker or nominee and return it to the broker or nominee so that you receive a legal proxy to present at the Annual Meeting.
 
Q:   How may I vote my shares at the Annual Meeting?
 
A:   You may vote shares held directly in your name as the stockholder of record in person at the Annual Meeting. If you choose to vote in person at the Annual Meeting, please bring the enclosed proxy card and proof of identification with you to the Annual Meeting. You may vote shares that you beneficially own if you receive and present at the Annual Meeting a proxy from your broker or nominee, together with proof of identification. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the Annual Meeting.
 
Q:   How may I vote my shares without attending the Annual Meeting?
 
A:   Whether you hold shares directly as the stockholder of record or as the beneficial owner in street name, you may direct your vote without attending the Annual Meeting. You may vote by granting a proxy or, for shares held in street name, by submitting voting instructions to your broker or nominee. Whether you are a a stockholder of record or a beneficial owner, you may vote without attending the Annual Meeting by marking, dating and signing your proxy card and mailing in the enclosed, self-addressed, postage prepaid envelope. No postage is required if the proxy is mailed in the United States. In addition, beneficial owners may vote without attending the Annual Meeting as follows:
 
  •  By Internet — If you have Internet access, you may submit your proxy from any location in the world by following the “Internet Voting” instructions enclosed with your proxy card.
 
  •  By Telephone — You may submit your proxy by following the “Telephone Voting” instructions enclosed with your proxy card.
 
Shares of common stock that are represented by a properly executed proxy, if such proxy is received in time and not revoked, will be voted at the Annual Meeting according to the instructions indicated in the proxy. If no instructions are indicated, the shares will be voted FOR approval of the proposals listed on the proxy card. Discretionary authority is provided in the proxy as to any matters not specifically referred to in the proxy. Our board of directors is not aware of any other matters that are likely to be brought before the Annual Meeting. If other matters are properly brought before the Annual Meeting, including a proposal to adjourn the Annual Meeting to permit the solicitation of additional proxies in the event that one or more proposals have not been approved by a sufficient number of votes at the time of the Annual Meeting, the persons named in the enclosed proxy will vote on such matters in their own discretion.
 
If you are a beneficial owner of common stock, please refer to the voting instruction card included by your broker or nominee for applicable voting procedures.


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Q: How may I revoke a proxy or an Internet or telephone vote?
 
A:   A stockholder executing a proxy card may revoke the proxy at any time before it is exercised by giving written notice revoking the proxy to our corporate secretary, by subsequently filing another proxy bearing a later date, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not automatically revoke a stockholder’s prior proxy. All written notices of revocation or other communications with respect to revocation of proxies should be addressed to Biodel Inc., 100 Saw Mill Road, Danbury, Connecticut 06810, attention: corporate secretary. If you own your shares in street name your bank or brokerage firm should provide you with appropriate instructions for changing your vote.
 
Q:   How does our board of directors recommend that I vote on the proposal to elect the nominees to our board of directors?
 
A:   Our board of directors unanimously recommends that stockholders vote FOR this proposal at the Annual Meeting.
 
Q:   How does our board of directors recommend that I vote on the proposal to ratify the appointment of BDO Seidman, LLP as our registered independent public accounting firm for the fiscal year ending September 30, 2008?
 
A:   Our board of directors unanimously recommends that stockholders vote FOR this proposal at the Annual Meeting.
 
Q:   What is the quorum required for the Annual Meeting?
 
A:   Holders of record of the common stock on January 7, 2008 are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement of the Annual Meeting. As of the record date, 20,282,875 shares of common stock were outstanding. The presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. Shares or our common stock represented in person or by proxy, including broker non-votes and shares that abstain or do not vote with respect to one or more of the matters to be voted upon, will be counted for the purpose of determining whether a quorum exists.
 
Q:   How are votes counted?
 
A:   Each holder of common stock is entitled to one vote at the Annual Meeting on each matter to come before the Annual Meeting, including the election of directors, for each share held by such stockholder as of the record date. Votes cast in person at the Annual Meeting or by proxy, Internet vote or telephone vote will be tabulated by the inspector of election appointed for the Annual Meeting, who will determine whether a quorum is present.
 
Q:   What vote is required on the proposal to elect the nominees to our board of directors?
 
A:   Individual director nominees are elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy at the Annual Meeting and entitled to vote generally on the election of directors. Accordingly, the directorships to be filled at the Annual Meeting will be filled by the nominees receiving the highest number of votes. In the election of directors, votes may be cast for or withheld with respect to any or all nominees. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
 
Q:   What vote is required to ratify the appointment of BDO Seidman, LLP as our independent registered public accounting firm?
 
A:   The appointment of BDO Seidman, LLP as our independent registered public accounting firm will be ratified if we receive the affirmative vote of a majority of shares present in person, by remote communication, if applicable, or represented by proxy at the Annual Meeting and entitled to vote generally. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
 
Q:   What does it mean if I receive more than one proxy or voting instruction card?


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A:   This means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.
 
Q:   Where can I find the voting results of the Annual Meeting?
 
A:   We will announce preliminary voting results at the Annual Meeting and publish final results in our quarterly report on Form 10-Q for the second quarter of fiscal 2008.
 
Q:   Is my vote confidential?
 
A:   Proxy cards, ballots and voting tabulations that identify individual stockholders are mailed or returned to us and handled in a manner intended to protect your voting privacy. Your vote will not be disclosed except: (1) as needed to permit us to tabulate and certify the vote; (2) as required by law; or (3) in limited circumstances, such as a proxy contest in opposition to the director candidates nominated by our board of directors. In addition, all comments written on the proxy card or elsewhere will be forwarded to management, but your identity will be kept confidential unless you ask that your name be disclosed.
 
Annual Report to Stockholders
 
A copy of our annual report to stockholders for the 2007 fiscal year, which contains our financial statements, accompanies this Proxy Statement. We have filed an annual report on Form 10-K for the 2007 fiscal year with the Securities and Exchange Commission, or the SEC, which forms a part of the 2007 annual report to stockholders. Stockholders separately may obtain, free of charge, a copy of the 2007 Form 10-K, without exhibits, by writing to Biodel Inc., 100 Saw Mill Road, Danbury, Connecticut 06810, attention: corporate secretary. The annual report on Form 10-K is also available through our website at www.biodel.com . The annual report to stockholders and the 2007 Form 10-K are not proxy soliciting materials.


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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table sets forth information regarding beneficial ownership of our capital stock as of December 31, 2007 by the following: (a) each person known by us to be the beneficial owner of 5% or more of any class of our voting securities; (b) each of our directors and named executive officers; and (c) all of our directors and executive officers as a group.
 
There were 20,282,167 shares of common stock outstanding as of December 31, 2007. This number does not give effect to the sale of shares of our common stock offered by certain of our named executive officers pursuant to our registration statement on Form S-1 (Registration No. 333-148688) filed with the SEC on January 16, 2008 or pursuant to Rule 10b5-1 plans of certain of our named executive officers. For purposes of the table below, we deem shares of common stock subject to options or warrants that are currently exercisable or exercisable within 60 days of December 31, 2007 to be outstanding and to be beneficially owned by the person holding the options or warrants for the purpose of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, the persons or entities in this table have sole voting and investing power with respect to all of the shares of common stock beneficially owned by them, subject to community property laws, where applicable.
 
Unless otherwise indicated, the address for each of the stockholders in the table below is c/o Biodel Inc., 100 Saw Mill Road, Danbury, Connecticut 06810.
 
                 
    Amount and Nature of
  Percent of
Name of Beneficial Owner
  Beneficial Ownership   Class (%)
 
5% Stockholders
               
Entities affiliated with OrbiMed Advisors, LLC
    2,002,048(1)       9 .9%
Great Point Partners I, L.P
    1,966,574(2)       9 .7
Entities Affiliated with Vivo Ventures
    1,685,632(3)       8 .3
Ridgeback Capital Investments Ltd.
    1,500,000(4)       7 .4
                 
Executive Officers and Directors
               
Dr. Solomon S. Steiner
    4,331,117(5)       21 .3
David Kroin
    2,002,048(6)       9 .9
Dr. Samuel Wertheimer
    2,002,048(7)       9 .9
Dr. Albert Cha
    1,721,106(8)       8 .5
Scott A. Weisman
    730,563(9)       3 .6
Erik Steiner
    257,448(10)       1 .3
Dr. Roderike Pohl
    202,589(11)       1 .0
Dr. Ira Lieberman
    53,340(12)       *  
Dr. Daniel Lorber
    60,514(13)       *  
Dr. Charles Sanders
    56,358(14)       *  
Dr. Brian J.G. Pereira
    25,000(15)       *  
Dr. Andreas Pfützner
    30,265(16)       *  
F. Scott Reding
    95,877(17)       *  
All current executive officers and directors as a group (14 individuals)
    11,738,699(18)       56 .0
 
 
* Less than one percent.
 
(1) Consists of (i) 1,312,692 shares of our common stock held by Caduceus Private Investments II LP, (ii) 491,506 shares of our common stock held by Caduceus Private Investments II (QP), (iii) 162,694 shares of common stock held by UBS Juniper Crossover Fund, L.L.C., (iv) options to purchase 23,464 shares of our common stock held directly by Caduceus Private Investments II LP, which are exercisable within


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60 days of December 31, 2007, (v) options to purchase 8,785 shares of our common stock held directly by Caduceus Private Investments II (QP), LP, which are exercisable within 60 days of December 31, 2007 and (vi) options to purchase 2,907 shares of our common stock held directly by UBS Juniper Crossover Fund, LLC, which are exercisable within 60 days of December 31, 2007. The principal business address of Orbimed Advisors, LLC is 767 Third Avenue, New York, New York 10017.
 
(2) The principal business address of Great Point Partners I, L.P. is 165 Mason Street, Greenwich Connecticut 06824.
 
(3) Consists of (i) 1,672,147 shares of our common stock held by Vivo Ventures Fund V, L.P. and (ii) 13,485 shares of our common stock held by Vivo Ventures V Affiliates Fund, L.P. Vivo Ventures V, LLC, the general partner of Vivo Ventures V, LP, and Frank Kung, Edgar Engleman, and Albert Cha, members of Vivo Ventures V, LLC may be deemed to have shared voting and dispositive power as to these shares of common stock. The principal business address of Vivo Ventures is 575 High Street, Palo Alto, CA 94301.
 
(4) Based solely on a Schedule 13G filed on November 26, 2007 by Ridgeback Capital Investments Ltd. (“RCI”), Ridgeback Capital Management LLC (“RCM”) and Wayne Holman. According to the Schedule 13G, Wayne Holman and RCM do not own any shares directly. Pursuant to an investment management agreement, RCM maintains investment and voting power with respect to the securities held by RCI. Wayne Holman controls RCM. Accordingly, Wayne Holman and RCM may be deemed to own beneficially all of the shares. Both Wayne Holman and RCM disclaim beneficial ownership of any of the shares, except to the extent of any pecuniary interest therein. The principal business address of each of RCI, RCM and Wayne Holman is 430 Park Avenue, 12th Floor, New York, New York 10022.
 
(5) Includes (i) 4,136,707 shares of our common stock owned by Steiner Ventures LLC, or SV, of which Dr. Steiner is the sole managing member and (ii) options to purchase 79,706 shares of our common stock which are exercisable within 60 days of December 31, 2007. Dr. Steiner and his wife jointly own 52% of SV with the balance split equally among their four adult children, including Erik Steiner. Dr. Steiner disclaims beneficial ownership of the shares held by SV, except to the extent of his pecuniary interest therein. The address for SV is 24 Old Wagon Road, Mt. Kisco, New York 10549.
 
(6) Includes 1,966,574 shares of our common stock held by Great Point Partners I, L.P. and options to purchase 35,156 shares of our common stock, which are exercisable within 60 days of December 31, 2007. Mr. Kroin is a co-founder and managing director of Great Point Partners I, L.P. and may be deemed to beneficially own these shares.
 
(7) Consists of (i) 1,312,692 shares of our common stock held by Caduceus Private Investments II LP, (ii) 491,506 shares of our common stock held by Caduceus Private Investments II (QP), LP, (iii) 162,694 shares of common stock held by UBS Juniper Crossover Fund, L.L.C., (iv) options to purchase 23,464 shares of our common stock held directly by Caduceus Private Investments II LP, which are exercisable within 60 days of December 31, 2007, (v) options to purchase 8,785 shares of our common stock held directly by Caduceus Private Investments II (QP), LP, which are exercisable within 60 days of December 31, 2007 and (vi) options to purchase 2,907 shares of our common stock held directly by UBS Juniper Crossover Fund, LLC, which are exercisable within 60 days of December 31, 2007. Dr. Wertheimer is a principal of OrbiMed Advisors, LLC and may be deemed to beneficially own these shares.
 
(8) Includes (i) 1,672,147 shares of our common stock held by Vivo Ventures Fund V, L.P. and (ii) 13,485 shares of our common stock held by Vivo Ventures V Affiliates Fund, L.P. and (iii) options to purchase 35,156 shares of our common stock, which are exercisable within 60 days of December 31, 2007. Dr. Cha is a managing partner of Vivo Ventures Fund V, L.P. and may be deemed to beneficially own these shares.
 
(9) Consists of 546,009 shares of common stock, warrants to purchase 118,815 shares of common stock, options to purchase 65,739 shares of our common stock which are exercisable within 60 days of December 31, 2007. The shares include 107,873 shares held by the 1999 Weisman Family Trust, of which Mr. Weisman and his spouse are the trustees. Mr. Weisman disclaims beneficial ownership of the shares held by the trust.


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(10) Includes options to purchase 12,398 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(11) Includes options to purchase 7,971 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(12) Consists of options to purchase 53,340 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(13) Includes options to purchase 57,326 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(14) Includes options to purchase 56,199 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(15) Consists of options to purchase 25,000 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(16) Includes options to purchase 20,370 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
(17) Includes options to purchase 90,000 shares of our common stock which are exercisable within 60 days of December 31, 2007 and 3,290 shares of our common stock owned by Mr. Reding’s spouse. Mr. Reding disclaims beneficial ownership of the shares owned by his spouse.
 
(18) Includes warrants to purchase 118,815 shares of common stock and options to purchase 543,738 shares of our common stock which are exercisable within 60 days of December 31, 2007.
 
AGENDA ITEM 1:
 
ELECTION OF DIRECTORS
 
Nominees for Election as Directors
 
Our board of directors is divided into three classes, with one class being elected each year and members of each class holding office for a three-year term. At the Annual Meeting, Class I Directors will stand for election. Our board of directors is currently authorized to have, and we currently have, nine members.
 
Our board of directors has nominated Dr. Albert Cha, Mr. David Kroin, and Dr. Samuel Wertheimer as nominees for election as Class I Directors, each for three-year terms, until the 2011 annual meeting of stockholders or until their respective successors are elected and qualified. Each of the nominees is currently serving as a director.
 
The nominees have indicated that they are willing and able to serve as directors if elected. If any of such nominees should become unable or unwilling to serve, the proxies intend to vote for the replacement or replacements selected by the nominating and corporate governance committee of our board of directors. None of our directors are related to any other director or to any of our executive officers, other than as noted below.


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Information About the Directors
 
The following table sets forth our directors and their respective ages and positions as of December 31, 2007:
 
                 
Name
 
Age
 
Position
 
Dr. Solomon S. Steiner
    70       Chairman, President and Chief Executive Officer  
Dr. Albert Cha(1)
    35       Director  
David Kroin(3)
    31       Director  
Dr. Ira W. Lieberman(1)(3)
    64       Director  
Dr. Daniel Lorber
    60       Director  
Dr. Brian J.G. Pereira(2)(3)
    49       Director  
Dr. Charles Sanders(1)
    75       Director  
Dr. Samuel Wertheimer(2)
    47       Director  
Scott A. Weisman(1)(3)
    52       Director  
 
 
(1) Member of the Compensation Committee.
 
(2) Member of the Nominating and Corporate Governance Committee.
 
(3) Member of the Audit Committee.
 
Dr. Solomon S. Steiner co-founded our company and has served as our Chairman, President and Chief Executive Officer since our inception in December 2003. In 1991, Dr. Steiner founded Pharmaceutical Discovery Corporation, or PDC, a biopharmaceutical corporation. Dr. Steiner served as PDC’s Chief Executive Officer and Chairman of the Board of Directors from its inception until December 2001, when PDC was merged with two other companies to form MannKind Corporation. From December 2001 to February 2003, Dr. Steiner served on MannKind’s board of directors and as a Corporate Vice President and Chief Scientific Officer. In 1985, Dr. Steiner founded and was the Chairman of the Board of Directors and President of Clinical Technologies Associates, Inc., or CTAI, now known as Emisphere Technologies, Inc. Under his leadership CTAI went public in February of 1989. Dr. Steiner is an inventor of Emisphere’s oral delivery system for peptides and mucopolysaccharides. Dr. Steiner is currently an adjunct full professor at New York Medical College and research full professor of psychiatry and neurology at New York University School of Medicine. Dr. Steiner received a Ph.D. from New York University. Dr. Steiner is Erik Steiner’s father.
 
Dr. Albert Cha has been a member of our board of directors since July 2006. In October 2000, Dr. Cha joined Vivo Ventures, a venture capital firm, and serves as a managing partner. Dr. Cha serves on the board of directors of BioForm Medical, Inc., a medical aesthetics company. He also serves on the boards of several private biotechnology and medical device companies. Dr. Cha received an M.S. from Stanford University and an M.D. and Ph.D. from the University of California at Los Angeles.
 
Mr. David Kroin has been a member of our board of directors since July 2006. Mr. Kroin is a co-founder and managing director of Great Point Partners, LLC, an asset management firm. From December 1998 to September 2003, Mr. Kroin was an investment professional for J.H. Whitney & Co., a private equity firm. Mr. Kroin serves on the board of directors of Gentium S.p.A., a biopharmaceutical company.
 
Dr. Ira W. Lieberman has been a member of our board of directors since December 2004. Since October 2004, Dr. Lieberman has served as President and Chief Executive Officer of LIPAM International, Inc., an advisory and investment firm, which performs advisory and consulting work for the World Bank, client governments, and private sector clients. From July 2003 to October 2004, Dr. Lieberman served as a Senior Economic Advisor to George Soros for the Open Society Institute, a grant making foundation. From February 1993 to July 2004, Dr. Lieberman served in several positions for the World Bank. Dr. Lieberman received an MBA from Columbia University and a Ph.D. from Oxford University.
 
Dr. Daniel Lorber has been a member of our board of directors since December 2004 and since October 2004, a member of our scientific advisory board. Since 1981, Dr. Lorber has served as the medical director of the Diabetes Control Foundation, Diabetes Care and Information Center in Flushing, New York and since 1991, as the director of endocrinology at The New York Hospital Medical Center of Queens. Dr. Lorber is


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also an attending physician in endocrinology and general internal medicine at the New York Hospital Medical Center of Queens. Since 1994, Dr. Lorber has served as a clinical associate professor of medicine at Weill Medical College of Cornell University. Dr. Lorber also serves as a consultant in medical, dental and podiatric liability litigation and to the insurance industry on care standards for diabetes mellitus. Dr. Lorber is a member of the board of directors of the American Diabetes Association. Dr. Lorber received an M.D. from the Albert Einstein College of Medicine and completed a fellowship in endocrinology at the Vanderbilt University Medical Center.
 
Dr. Brian J.G. Pereira has been a member of our board of directors since November 2007. Dr. Pereira has served as Chief Executive Officer of AMAG Pharmaceuticals, Inc., a biopharmaceutical company, since November 2006 and as President of AMAG Pharmaceuticals since November 2005. Dr. Pereira has served as a director of AMAG Pharmaceuticals since July 2004. Dr. Pereira served as President and Chief Executive Officer of the New England Health Care Foundation, a physician’s group at Tufts-New England Medical Center from October 2001 to November 2005, and held various other positions at Tufts-New England Medical Center from 1993 to 2001. He is a Professor of Medicine at Tufts University School of Medicine and at the Sackler School of Biomedical Sciences of Tufts University. Dr. Pereira served as President of the National Kidney Foundation from 2002 to 2004, and has served on the editorial board of twelve scientific journals. He also serves as a director of the National Kidney Foundation, and Satellite Health Care Inc. and is the Chairman of the Board of the Harvard-MIT Biomedical Enterprise Program. Dr. Pereira is a graduate of St. John’s Medical College, Bangalore, India and has an MBA from the Kellogg Business School, Northwestern University.
 
Dr. Charles Sanders has been a member of our board of directors since August 2006. Since 1995, Dr. Sanders has served on numerous boards and continues to chair the boards of Project Hope and the Foundation for the National Institutes of Health. From July 1989 to July 1994, Dr. Sanders served as Chief Executive Officer of Glaxo Inc., a pharmaceutical company, and from 1992 until his retirement in 1995, served as the Chairman of the Board of Glaxo Inc. Previously Dr. Sanders was general director of Massachusetts General Hospital and professor of medicine at Harvard Medical School. Dr. Sanders received an M.D. from Southwestern Medical College of the University of Texas. Dr. Sanders serves on the boards of directors of Icagen, Inc., a biopharmaceutical company, Vertex Pharmaceuticals Incorporated, a biotechnology company, Genentech, Inc., a biotechnology company, Biopure Corporation, an oxygen therapeutic company, and Cephalon, Inc., a biopharmaceutical company.
 
Dr. Samuel Wertheimer has been a member of our board of directors since July 2006. Since 2000, Dr. Wertheimer has been a principal at OrbiMed Advisors, LLC in the private equity funds management group. Dr. Wertheimer was a Fellow at the Memorial Sloan-Kettering Cancer Center. Dr. Wertheimer received a Ph.D. from New York University, and an M.P.H. from Yale University.
 
Mr. Scott A. Weisman has been a member of our board of directors since December 2004. He is a managing member of Etico Capital LLC, a merchant banking and advisory firm. From March 2004 to February 2007, Mr. Weisman served as a managing director of McGinn, Smith & Company, Inc., an investment banking firm. From 1998 to September 2003, Mr. Weisman served in various senior positions for H.C. Wainwright &Co., Inc., an investment banking firm. Prior thereto, Mr. Weisman was a practicing securities attorney and a partner in the law firm of Kelley Drye & Warren LLP. Mr. Weisman received a J.D. from Albany Law School.
 
Our board of directors unanimously recommends a vote FOR the election of each of the nominees to serve as directors.


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CORPORATE GOVERNANCE
 
Our board of directors believes that good corporate governance is important to ensure that we are managed for the long-term benefit of our stockholders. This section describes the key corporate governance guidelines and practices that we have adopted. The charters governing the audit committee, the compensation committee, and the nominating and corporate governance committee, the code of business conduct and ethics, as well as our corporate governance guidelines, are posted on the corporate governance page of our website at www.biodel.com . You may also obtain a copy of any of these documents without charge by writing to Biodel Inc., 100 Saw Mill Road, Danbury, Connecticut 06810, attention: corporate secretary.
 
Corporate Governance Guidelines
 
Our board of directors has adopted corporate governance guidelines to assist in the exercise of its duties and responsibilities and to serve our best interests and those of our stockholders. These guidelines, which provide a framework for the conduct of our board of directors’ business, provide that:
 
  •  our board of directors’ principal responsibility is to oversee our management;
 
  •  a majority of the members of our board of directors shall be independent directors as defined by NASDAQ listing standards and applicable SEC rules;
 
  •  the independent members of our board of directors regularly meet in executive session; and
 
  •  we adopt written corporate governance guidelines and a written code of business conduct and ethics for all of our officers, employees and directors.
 
Board Meetings and Attendance
 
Our board of directors held 6 meetings during our 2007 fiscal year, which ended on September 30, 2007. During fiscal 2007, each director attended at least 75% of the aggregate of the total number of meetings of our board of directors and the total number of meetings held by each committee of our board of directors on which such director served during the period for which such director served.
 
Board Determination of Independence
 
Under applicable NASDAQ rules, a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that none of Messrs. Cha, Kroin, Lieberman, Pereira, Sanders, Lorber, Wertheimer and Weisman, who comprise our audit, compensation and nominating and corporate governance committees, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
 
Director Attendance at Annual Meeting of Stockholders
 
Resolutions adopted by our board of directors provide that directors are expected to attend the Annual Meeting.
 
Board Committees
 
Our board of directors has established three standing committees — audit, compensation, and nominating and corporate governance — each of which operates under a charter that has been approved by our board of directors. Our board of directors has determined that all of the members of each of the board of directors’ three standing committees are independent as defined under the rules of the NASDAQ Stock Market, including, in the case of all members of the audit committee, the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.


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Audit Committee
 
Our audit committee consists of Dr. Lieberman, the chair of the committee, Mr. Kroin, Dr. Pereira and Mr. Weisman. The committee’s responsibilities include:
 
  •  selecting our independent registered public accounting firm for each fiscal year, confirming and assuring their independence, and approving the fees and other compensation to be paid to them;
 
  •  annually reviewing and discussing with the independent registered public accounting firm all significant relationships which affect their independence;
 
  •  overseeing the work of the independent registered public accounting firm (including resolving disagreements between them and management regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
 
  •  approving all audit and non-audit services provided by the independent registered public accounting firm (or subsequently recommending to our board of directors for approval additional audit and/or non-audit services in those circumstances where a subsequent approval is necessary and permissible);
 
  •  discussing with the independent registered public accounting firm the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and disagreements with management, and all matters required to be discussed by Statement on Auditing Standards No. 61, as amended, modified or supplemented from time to time;
 
  •  reviewing the performance of the independent registered public accounting firm;
 
  •  reviewing, and discussing with management and the independent registered public accounting firm, prior to filing or release, our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, including the annual audited financial statements and quarterly unaudited financial statements, respectively, contained in those reports;
 
  •  reviewing on a periodic basis, the unaudited quarterly operating results in our quarterly earnings release;
 
  •  reviewing with management and our tax advisors the status of tax returns, including open years and potential disputes, along with the adequacy of tax reserves included in our consolidated financial statements;
 
  •  establishing procedures for receiving, retaining and treating complaints received by us regarding accounting, internal accounting controls or auditing matters and procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
 
  •  reviewing any related party transactions;
 
  •  reviewing, in conjunction with counsel, any legal or regulatory matters that could have a significant impact on our financial statements; and
 
  •  reviewing and evaluating the committee’s performance.
 
Our board of directors has determined that Mr. Lieberman is an “audit committee financial expert” as defined by applicable SEC rules. Our audit committee met 7 times in fiscal 2007.
 
Compensation Committee
 
Our compensation committee consists of Dr. Cha, the chair of the committee, Dr. Lieberman, Mr. Sanders and Mr. Weisman. The committee’s responsibilities include:
 
  •  reviewing and recommending for approval by our board of directors, on an annual basis, the compensation of our chief executive officer and our other executive officers;


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  •  reviewing and making recommendations to our board of directors with respect to director compensation;
 
  •  reviewing and making recommendations to our board of directors with respect to incentive-compensation and equity-based plans that are subject to approval by our board of directors;
 
  •  preparing reports on executive compensation, including a Compensation Discussion and Analysis; and
 
  •  periodically reviewing and evaluating the committee’s own performance.
 
Our compensation committee met 4 times in fiscal 2007. The processes and procedures followed by our compensation committee in considering and determining executive and director compensation are described below under the headings “— Executive Compensation” and “— Director Compensation”.
 
Nominating and Corporate Governance Committee
 
Our nominating and corporate governance committee consists of Dr. Wertheimer, the chair of the committee, and Dr. Pereira. The committee’s responsibilities include:
 
  •  recommending to our board of directors the nominees for election as directors at any meeting of stockholders and the persons to be elected by our board of directors to fill any vacancies thereon;
 
  •  from time to time establishing criteria for the selection of new directors to serve on our board of directors;
 
  •  developing and recommending to our board of directors a set of corporate governance guidelines applicable to us and, from time to time, as it deems appropriate, reviewing and reassessing the adequacy of such corporate governance guidelines and recommending any proposed changes to our board of directors for its consideration;
 
  •  overseeing the self-evaluation of our board of directors to determine whether it and its committees are functioning effectively, determining the nature of the evaluation, supervising the conduct of the evaluation and preparing an assessment of our board of directors’ performance to be discussed with it;
 
  •  overseeing a review by our board of directors on succession planning; and
 
  •  periodically reviewing and evaluating the committee’s own performance.
 
Our nominating and corporate governance committee met 1 time in fiscal 2007. The processes and procedures followed by our nominating and corporate governance committee in identifying and evaluating director candidates are described below under the heading “— Director Nomination Process”.
 
Executive and Director Compensation Processes
 
The compensation committee has implemented an annual performance review program for our executives, under which annual performance for each executive is measured at the end of each calendar year. Individual goals focus on contributions that facilitate the achievement of corporate goals, such as the achievement of specific research, clinical, regulatory, and operational milestones. Annual salary increases, annual bonuses, and annual stock option awards granted to our executives are tied to the achievement of these corporate and individual performance goals. During the first calendar quarter of each year, we evaluate individual and corporate performance against the goals for the recently completed year. Each executive’s evaluation begins with a written self-assessment, which is submitted to the chief executive officer. The chief executive officer then prepares a written evaluation based on the executive’s self-assessment, the chief executive officer’s own evaluation and input from others within our company, if appropriate. This process leads to a recommendation by the chief executive officer for annual executive salary increases, annual stock option and restricted stock unit awards and bonuses, if any, which is then reviewed and approved by the compensation committee.
 
In accordance with our 2005 Non-Employee Directors’ Stock Option Plan, upon appointment, non-employee directors receive a one time grant of an option to purchase 25,000 share of common stock, which immediately vest. Annually, non-employee directors receive an option to purchase 10,000 shares of common


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stock, which also immediately vest. The exercise price of these options is equal to the closing price of our common stock on the Nasdaq Global Market the day prior to the date of grant, as determined by our board of directors. Each such option expires ten years after the date of grant.
 
The compensation committee has the authority to retain compensation consultants and other outside advisors to assist in the evaluation of executive officer compensation. For the purposes of evaluating 2007 compensation, the compensation committee retained Frederick W. Cook & Company, Inc.
 
Director Nomination Process
 
The process followed by the nominating and corporate governance committee to identify and evaluate director candidates includes requests to the members of our board of directors and others for recommendations, annual meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the nominating and corporate governance committee and our board of directors.
 
Our board of directors does not currently prescribe any minimum qualifications for director candidates, however, the nominating and corporate governance committee will take into account a potential candidate’s experience, areas of expertise and other factors relative to the overall composition of our board of directors.
 
Stockholders may recommend individuals to the nominating and corporate governance committee for consideration as potential director candidates by submitting the names of the candidate(s), together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made, to nominating and corporate governance committee, attn: corporate secretary, Biodel Inc., 100 Saw Mill Road, Danbury, Connecticut. Assuming that appropriate biographical and background material has been provided on a timely basis, the nominating and corporate governance committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others. In November 2007, Dr. Pereira was appointed by our board of directors as a new director. Dr. Pereira was originally proposed to us by one of our non-employee directors.
 
Communications with the Independent Directors
 
Our board of directors will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Our corporate secretary is primarily responsible for monitoring and responding to communications from stockholders and other interested parties and for providing copies to our board of directors or to the individual director so designated on a periodic basis, as he considers appropriate.
 
Unless any communication is marked confidential and is addressed to a particular board member, our corporate secretary, prior to forwarding any correspondence, will review such correspondence and, in his discretion, will not forward items if they are deemed to be of a commercial, irrelevant or frivolous nature or otherwise inappropriate for consideration by our board of directors.
 
Interested parties may send written communications to the attention of our corporate secretary at the following address: Biodel Inc., 100 Saw Mill Road, Danbury, Connecticut 06810.
 
Code of Business Conduct and Ethics
 
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted the code of business conduct and ethics on our website, which is located at www.biodel.com . In addition, we intend to disclose on our website all disclosures that are required by law or NASDAQ Stock Market listing standards concerning any amendments to, or waivers from, any provision of the code of business conduct and ethics.


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DIRECTOR COMPENSATION
 
We pay each of our non-employee directors $15,000 annually. In addition, the chairman of our audit committee receives an additional annual fee of $5,000 and the chairmen of our compensation committee and our nominating and corporate governance committee each receive an additional annual fee of $3,000.
 
We also pay each of our non-employee directors for each meeting attended by the director. From November 2006 through December 2006, we paid each of our non-employee directors either $600 in cash or 106 shares of our common stock for each meeting of the board attended in person and $300 in cash or 53 shares of our common stock for each meeting of the board attended by telephone. Effective January 1, 2007, we pay each of our non-employee directors $1,500 for each meeting of the board attended in person, $750 for each meeting of the board attended by telephone, $1,000 for each committee meeting attended in person and $500 for each committee meeting attended by telephone.
 
In accordance with our 2005 Non-Employee Directors’ Stock Option Plan, upon appointment, our non-employee directors receive a one-time grant of an option to purchase 25,000 shares of our common stock, which are fully vested upon grant. In addition, on the date of each Annual Meeting, our non-employee directors will receive an option to purchase 10,000 shares of our common stock, which will also be fully vested upon grant. Furthermore, upon the effective date of the registration statement for our initial public offering, our non-employee directors received a one-time grant of an option to purchase 25,000 shares of our common stock, which were fully vested upon grant. The exercise price of our non-employee director options is the fair market value as determined by our board of directors on the date of grant. Each such option expires ten years after the date of grant. The options granted to our non-employee directors upon the effectiveness of the registration statement for our initial public offering have an exercise price of $15.00 per share, which was the initial public offering price.
 
We reimburse our non-employee directors for reasonable expenses incurred in connection with attending board and committee meetings.
 
The following table sets forth information for the fiscal year ended September 30, 2007 with respect to the compensation of our directors, other than Dr. Steiner, our President and Chief Executive Officer. See “Executive Compensation — Summary Compensation Table” for information regarding the compensation of Dr. Steiner for fiscal 2007.
 
Fiscal 2007 Director Compensation Table
 
                                 
    Fees
                   
    Earned or
                   
    Paid in
    Stock
    Option
       
    Cash
    Awards
    Awards
    Total
 
Name
  ($)     ($)(1)     ($)(2)(3)     ($)  
 
Dr. Albert Cha
    27,750       1,343       252,227       281,320  
David Kroin
    25,750       1,343       252,227       279,320  
Dr. Ira W. Lieberman
    34,250       1,343       263,270       298,863  
Dr. Daniel Lorber
    21,000       1,343       272,721       295,064  
Dr. Charles Sanders
    23,500       671       311,267       335,438  
Paul Sekhri(4)
    21,000             273,777       294,777  
Dr. Samuel Wertheimer
    24,250       1,343       252,227       277,820  
Scott A. Weisman
    28,750       1,343       263,270       293,363  
 
 
(1) The amounts in the “Stock Awards” column reflect the dollar amounts recognized as compensation expense for financial statement reporting purposes for each director during fiscal 2007, as required by SFAS No. 123(R).
 
(2) The amounts in the “Options Awards” column reflect the dollar amounts recognized as compensation expense for financial statement reporting purposes for each director during fiscal 2007, as required by SFAS No. 123(R), disregarding any estimates of forfeitures relating to service-based vesting conditions.


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For the assumptions relating to these valuations, see Note 2 to our 2007 audited financial statements, which are included in the annual report that accompanies this Proxy Statement.
 
(3) Pursuant to our 2005 Non-Employee Directors’ Stock Option Plan, on May 10, 2007, the effective date of the registration statement for our initial public offering, our non-employee directors received a one-time grant of an option to purchase 25,000 shares of our common stock, each with an exercise price of $15.00 per share, which was the initial public offering price. All such options were fully vested upon grant.
 
(4) Mr. Sekhri resigned from our board of directors effective November 16, 2007.
 
EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
This compensation discussion describes the material elements of compensation awarded to, earned by or paid to each of our named executive officers in our fiscal year ended September 30, 2007. The discussion primarily focuses on the information for fiscal 2007, but we also describe compensation actions taken after the last completed fiscal year to the extent it enhances the understanding of our executive compensation disclosure.
 
Our “named executive officers” for fiscal 2007 are Dr. Solomon S. Steiner, our chairman, president and chief executive officer, F. Scott Reding, our former chief financial officer, chief accounting officer and treasurer, Dr. Roderike Pohl, our vice president, research, Erik Steiner, our vice president, operations, and Dr. Andreas Pfützner, our chief medical officer. Dr. Pfützner serves part time pursuant to a consulting agreement with us. Effective November 13, 2007, Mr. Reding resigned from all his positions with us. On November 20, 2007, Gerard Michel became our chief financial officer, vice president of corporate development and treasurer.
 
The compensation committee of our board of directors oversees our executive compensation program. In this role, the compensation committee on an annual basis reviews, approves and recommends that our board of directors approve all compensation decisions relating to our named executive officers. Our compensation committee consists of Dr. Cha, the chair of the committee, Dr. Lieberman, Dr. Sanders and Mr. Weisman. These compensation committee members reviewed and recommended that our board of directors approve matters relating to the compensation of our executive officers, relying in part on their substantial business experience.
 
Objectives and Philosophy of Our Executive Compensation Program
 
The primary objectives of our compensation committee with respect to executive compensation are to:
 
  •  attract and retain superior executive talent;
 
  •  motivate and reward executives whose knowledge, skills and performance are critical to our business;
 
  •  ensure executive compensation is aligned with our corporate strategies and business objectives; and
 
  •  align executives’ incentives with the creation of stockholder value.
 
To achieve these objectives, our compensation committee evaluates our executive compensation programs with the goal of setting compensation at levels the committee believes are competitive with those of other companies in our industry and our region that compete with us for executive talent. Historically, we have also provided a portion of our executive compensation in the form of stock options that vest over time, which we believe helps us retain our executive officers and align their interests with those of our stockholders by allowing them to participate in the longer term success of our company as reflected in stock price appreciation.


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Overview of our Executive Compensation Process
 
In determining any element of a named executive officer’s compensation in a manner consistent with the foregoing objectives, we believe that our compensation committee must consider the total compensation package for the package to be effective.
 
In July 2007, we initiated a review of our executive compensation program. Our compensation committee engaged Frederic W. Cook & Company, Inc., an independent consulting firm, to conduct a competitive assessment of the compensation of our executive officers with the specific goal of measuring the effectiveness of our compensation program in light of our ongoing business strategy. At our request, Frederic W. Cook surveyed compensation data for a peer group of development stage, publicly traded, biotechnology companies of similar size and market value to us. The data included publicly available proxy data as well as data from the Radford Biotechnology Survey. Based on this review, and in consultation with our compensation committee, the following fourteen companies were included in the peer group: Alexza Pharmaceuticals, Inc., Allos Therapeutics, Inc., Anesiva, Inc., Discovery Laboratories, Inc., GTx, Inc., Halozyme Therapeutics, Inc., Keryx Biopharmaceuticals, Inc., La Jolla Pharmaceutical Company, MannKind Corporation, Poniard Pharmaceuticals, Inc., Repros Therapeutics Inc., Savient Pharmaceuticals, Inc., Somaxon Pharmaceuticals, Inc. and Vanda Pharmaceuticals Inc.
 
In October 2007, Frederic W. Cook made recommendations to our compensation committee with respect to the appropriate cash compensation, long-term incentives and total compensation for our senior executives. Our compensation committee considered Frederic W. Cook’s analysis and recommendations in reviewing our compensation levels for fiscal 2007, and also considered Frederic W. Cook’s analysis and recommendations in determining our compensation levels for fiscal 2008, with the goal of ensuring that our compensation levels are reasonably competitive relative to the compensation paid by our peer group. Based in part on consultation with Frederic W. Cook and review of Frederic W. Cook’s analysis and recommendations, our compensation committee made adjustments to the 2008 base salaries for some of our executive officers, but we did not establish percentile targets relative to our peer group for the levels of compensation provided. These adjustments are described below in the discussion of the specific components of our executive officer compensation.
 
Total compensation for our named executive officers for fiscal 2007, taking into account base salary, annual cash bonuses and equity-based incentive awards, generally is targeted toward the median, or the 50th percentile, in executive compensation, by element as well as total compensation, among the companies with which we compete for our executive officers. Variations to this general target may occur as dictated by the experience level of the individual and market factors. We intend to review this comparative information annually for competitive purposes.
 
Components of our Executive Compensation Program
 
The primary elements of our executive compensation program are:
 
  •  base salary;
 
  •  discretionary annual cash bonuses;
 
  •  stock option awards;
 
  •  benefits and other compensation; and
 
  •  severance and change of control benefits.
 
We do not have any formal or informal policy or target for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, our compensation committee, after reviewing information provided by Frederic W. Cook, determines subjectively what it believes to be the appropriate level and mix of the various compensation components.


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Base Salary
 
We use base salary to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our executive officers. When establishing base salaries for 2007, our compensation committee considered the survey data of compensation in the peer group, as well as a variety of other factors, including the seniority of the individual, the level of the individual’s responsibility, the ability to replace the individual, the base salary of the individual at his or her prior employment, if applicable, and the number of well qualified candidates to assume the individual’s role. Generally, we believe that our executive officers’ base salaries should be targeted near the median of the range of salaries for executives in similar positions at comparable companies. In the case of Dr. Steiner and Dr. Pohl, their minimum base salaries are mandated by the terms of their employment agreements, although Dr. Pohl’s current salary is higher than the salary required by her agreement. In the case of Dr. Pfützner, compensation is determined pursuant to the terms of his consulting agreement with us. The base salary for Mr. Reding, was mandated by the terms of his employment agreement.
 
The following table sets forth the annual base salaries of our named executive officers for the year ended September 30, 2007 and the annual base salaries for fiscal 2008, effective November 20, 2007 for Dr. Steiner and December 1, 2007 for Dr. Pohl and Mr. Steiner.
 
                 
Name
  2007 Annual Salary     2008 Annual Salary  
 
Solomon S. Steiner
  $ 250,000     $ 375,000  
F. Scott Reding
  $ 195,000       N/A  
Roderike Pohl
  $ 150,000     $ 200,000  
Erik Steiner
  $ 150,000     $ 200,000  
 
With regard to Dr. Steiner’s salary increase, we considered his successes in fiscal 2007, including the completion of our initial public offering, the progress of our two pivotal Phase III clinical trials of VIAject tm , and the overall growth of our company. Our compensation committee increased Dr. Steiner’s salary for 2008 by 50%.
 
With regard to Dr. Pohl’s salary increase, we considered her success in strengthening our intellectual property portfolio, including the issuance to us of U.S. Patent No. 7,279,457 encompassing VIAject tm and VIAtab tm , as well the filing of a number of patent applications covering new product candidates. Our compensation committee increased Dr. Pohl’s salary for 2008 by 33%.
 
In establishing Erik Steiner’s salary for 2008, our compensation committee gave weight to our operational performance in 2007, and in particular to his leadership in transitioning our company to its new corporate headquarters in October 2007. Our compensation committee increased Mr. Steiner’s salary for 2008 by 33%.
 
More generally with regard to Dr. Steiner, Dr. Pohl and Mr. Steiner, we considered the fact that the salaries we paid to them in 2007 were significantly lower than the median of the range of salaries for executives in similar positions at comparable companies. While we believe that their salaries for 2008 are reasonably competitive, they remain below the median and our target range. In order to compete effectively for executive talent, and as a part of our successful transition to a publicly traded company, we may make larger-than-normal increases in salaries until we reach our target range.
 
Dr. Pfützner’s salary for 2008 will be determined by the terms of his consulting agreement, pursuant to which he is entitled to receive a non-refundable retainer of $150,000, payable within ten days after our receipt of an invoice from Dr. Pfützner on or after June 5, 2008. In addition, Dr. Pfützner is entitled to receive compensation of $2,000 for each full business day he devotes to the performance of services for us.
 
Gerard Michel joined us in November 2007. Mr. Gerard’s base salary of $310,000 is mandated by the terms of his offer letter with us. In assessing Mr. Michel’s candidacy, our compensation committee considered his business development experience to be particularly valuable given our current business strategy. In addition, data and guidance from Frederic W. Cook provided support for the compensation package for Mr. Michel, given his background and expertise.


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Our compensation committee reviews base salaries at least annually. The committee may adjust base salaries from time to time to realign them with market levels after taking into account individual responsibilities, performance and experience.
 
Discretionary Annual Cash Bonuses
 
Our compensation committee recommends to our board of directors discretionary annual cash bonuses to our executive officers. The bonuses are intended to compensate executive officers for achieving financial and operational goals and for achieving individual annual performance objectives. These objectives vary depending on the individual executive officer, but relate generally to business goals with major strategic impact, such as the successful completion of a clinical trial or the timely completion and filing of a new drug application, and to financial goals, such as keeping expenses within approved budgeted amounts.
 
We pay our discretionary annual bonuses in cash in amounts recommended by our compensation committee and approved by our board of directors. We ordinarily pay these bonuses in a single installment in the first quarter following the completion of a given fiscal year. Pursuant to Dr. Steiner’s employment agreement in effect during the fiscal year ended September 30, 2007, he was eligible to receive a discretionary annual bonus of up to 60% of his base salary. For the year ended September 30, 2007, Dr. Steiner received a discretionary annual bonus of $200,000, or 80% of his then current annual salary. Our compensation committee recommended that Dr. Steiner receive this discretionary annual bonus for fiscal 2007 for his substantial contributions in enabling our successful initial public offering, the progress of our two pivotal Phase III clinical trials of VIAject tm , and for augmenting our product pipeline by making important progress on our suite of six VIAject tm presentations.
 
We amended our employment agreement with Dr. Steiner in November 2007 to provide that his discretionary annual bonus may be in an amount of up to 50% of his base salary. Our compensation committee has not established targets or maximums for discretionary bonus amounts for Dr. Pohl or Erik Steiner. Dr. Pfützner’s consulting agreement with us does not provide for an annual cash bonus. Pursuant to our offer letter with Mr. Michel, he is eligible to receive a discretionary annual bonus of up to 35% of his base salary.
 
We expect our board of directors to determine the amounts of discretionary bonuses for the fiscal year ending September 30, 2008 following our compensation committee’s review of each executive officer’s individual performance and contributions to our strategic goals conducted during the first quarter following the end of fiscal 2008.
 
Stock Option Awards
 
Our equity award program is the primary vehicle for offering long-term incentives to our executive officers. We view stock options as inherently performance-based, as our executive officers are rewarded only if our stock price increases. In addition, the vesting feature of our equity grants should further our goal of executive retention because this feature provides an incentive to our executive officers to remain in our employ during the vesting period. During fiscal year 2007, equity awards to named executive officers consisted exclusively of stock options.
 
In determining the size of equity grants to our executive officers, our compensation committee considers comparative share ownership of executives in our compensation peer group, our performance, the applicable executive officer’s performance, the amount of equity previously awarded to the executive officer, the vesting of such awards, other components of executive officer compensation, including salary and bonus, and the recommendations of management and Frederic W. Cook.
 
We typically make an initial equity award of stock options to new executive officers and annual equity grants as part of our overall compensation program. All grants of options to our named executive officers are recommended by our compensation committee and approved by our board of directors. Our board of directors is required to consider the grant of stock or options to Dr. Steiner and Dr. Pohl at least annually, pursuant to


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their employment agreements. In December 2007, we awarded options to purchase shares of our common stock to our named executive officers for the following amounts:
 
         
    Number of Shares
 
Name
  Underlying Option Grant  
 
Solomon S. Steiner
    200,000  
Roderike Pohl
    50,000  
Erik Steiner
    60,000  
Andreas Pfützner
    5,000  
 
In November 2007, we awarded Mr. Michel an option to purchase 125,000 shares of our common stock pursuant to the terms of our offer letter with him.
 
Our compensation committee reviews all components of an executive officer’s compensation when determining annual equity awards to ensure that the executive officer’s total compensation conforms to our overall philosophy and objectives. We do not have any equity ownership guidelines for our executive officers. From year to year, we determine the size of equity grant awards to the named executive officers based on the factors set forth above. Specifically, for fiscal year 2007, grant sizes were determined primarily by the named executive officer’s individual performance over the prior fiscal year. We measured performance in consultation with Dr. Steiner, who recommended an award grant for each executive officer, except when assessing Dr. Steiner’s own performance, which was conducted by our compensation committee. In addition, we considered each executive officer’s career potential with us and our general competitive review.
 
Typically, the stock options we grant to our executive officers vest in four equal installments on the first four anniversaries of grant. Vesting and exercise rights cease shortly after termination of employment except in the case of death or disability. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents. We set the exercise price of all stock options to equal the prior day’s closing price of our common stock on the Nasdaq Global Market.
 
Benefits and Other Compensation
 
We maintain broad-based benefits that are provided to all employees, including health and dental insurance, life and disability insurance, a 401(k) plan, and an employee stock purchase plan. Executive officers are eligible to participate in all of our employee benefit plans, in each case on the same basis as other employees. We do not at this time have a 401(k) matching program.
 
We may from time to time award a cash signing bonus when an executive officer first joins us. Whether a signing bonus is paid and the amount of the bonus will be determined on a case-by-case basis under the specific hiring circumstances. For example, we may consider paying signing bonuses to compensate for amounts forfeited by an executive upon terminating prior employment, to assist with relocation expenses or to create additional incentive for an executive to join our company in a position where there is high market demand. We did not pay any cash signing bonuses in fiscal year 2007 to any of our named executive officers.
 
Severance and Change of Control Benefits
 
Pursuant to the terms of our agreements with our named executive officers, as well as the stock option agreements that we enter into upon the grant of options, our executive officers are entitled to certain benefits in the event of the termination of their employment under specified circumstances, including termination following a change of control of our company. We have provided more detailed information about these benefits, along with estimates of their value under various circumstances, under the caption “Potential Payments Upon Termination or Change of Control”, below.
 
We believe that providing these benefits helps us compete for executive talent. After reviewing the practices of companies represented in the compensation peer group, we believe that our severance and change of control benefits are generally in line with severance packages offered to executives by the companies in the peer group.


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In the case of Erik Steiner, our agreement with him provides for change of control benefits upon the occurrence of a “double trigger”. In other words, the change of control does not itself trigger benefits; rather, benefits are paid only if his employment is terminated during a specified period after the change of control. We believe that a “double trigger” benefit helps maximize stockholder value because it prevents an unintended windfall to executive officers in the event of a friendly change of control, while still providing appropriate incentives to cooperate in negotiating any change of control in which they believe they may lose their jobs.
 
In the case of Drs. Steiner and Pohl, pursuant to their employment agreements, in the event of a change of control, as defined in the agreements, the term of each agreement is automatically extended for a period of two years from the effective date of the change of control.
 
In the case of Dr. Pfützner, all of his unvested options immediately vest upon a change of control pursuant to his stock option award agreement.
 
Tax Considerations
 
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax deduction for compensation in excess of $1.0 million paid to our chief executive officer and our four other most highly paid executive officers. Qualifying performance-based compensation is not subject to the deduction limitation if specified requirements are met. We periodically review the potential consequences of Section 162(m) and we generally intend to structure the performance-based portion of our executive compensation, where feasible, to comply with exemptions in Section 162(m) so that the compensation remains tax deductible to us. However, our compensation committee may, in its judgment, authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate to attract and retain executive talent.
 
Summary Compensation Table
 
The following table sets forth information for the fiscal year ended September 30, 2007 with respect to compensation awarded to or earned by our named executive officers.
 
Summary Compensation Table
 
                                         
                      Option
       
    Fiscal
                Awards
       
Name and Principal Position   Year     Salary(1)     Bonus(2)     (3)     Total  
 
Solomon S. Steiner
    2007     $ 271,153     $ 200,000     $ 208,461     $ 679,614  
President and Chief Executive Officer
                                       
Andreas Pfützner
    2007     $ 346,799           $ 290,524     $ 637,323  
Chief Medical Officer
                                       
Erik Steiner
    2007     $ 154,615     $ 50,000     $ 86,573     $ 291,188  
Vice President Operations
                                       
F. Scott Reding
    2007     $ 178,750           $ 410,208     $ 588,958  
Chief Financial Officer and Treasurer(4)
                                       
Roderike Pohl
    2007     $ 153,317           $ 34,400     $ 187,717  
Vice President Research
                                       
 
 
(1) The amounts in the “Salary” column reflect the base salary earned and recorded during fiscal 2007.
 
(2) The amounts in the “Bonus” column reflect the actual amounts awarded to each named executive officer as annual discretionary cash bonuses. The bonuses were paid in December 2007.
 
(3) The amounts in the “Options Awards” column reflect the dollar amounts recognized as compensation expense for financial statement reporting purposes for each named executive officer during fiscal 2007, as required by SFAS No. 123(R), disregarding any estimates of forfeitures relating to service-based vesting conditions. For the assumptions relating to these valuations, see Note 2 to our 2007 audited financial statements, which are included in the annual report that accompanies this Proxy Statement.


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(4) On November 13, 2007, F. Scott Reding, our former Chief Financial Officer, Chief Accounting Officer and Treasurer, resigned from all of his positions with the Company. In connection with Mr. Reding’s resignation, we entered into a severance agreement that established the terms of Mr. Reding’s separation of employment. For further discussion of Mr. Reding’s severance agreement, please see Potential Payments Upon Termination and Change in Control, below.
 
Grants of Plan-Based Awards in Fiscal 2007
 
The following table sets forth information with respect to each grant of a plan-based award made to our named executive officers during the fiscal year ended September 30, 2007.
 
Fiscal 2007 Grants of Plan-Based Awards
 
                                 
          All Other
             
          Option Awards:
    Equity
    Grant Date
 
          No. of Securities
    Exercise or
    Fair Value of
 
          Underlying
    Base Price of
    Stock and
 
    Grant
    Options
    Option Awards
    Option
 
Name
  Date     (1)     ($/Sh)     Awards ($)(2)  
 
Solomon S. Steiner
    12/18/06       53,138       12.63       671,133  
      6/6/07       35,000       18.16       362,600  
Andreas Pfützner
    12/18/06       10,628       12.63       134,232  
      6/6/07       75,000       18.16       777,000  
Erik Steiner
    12/18/06       21,255       12.63       268,451  
      6/6/07       25,000       18.16       259,000  
F. Scott Reding
    11/1/06       141,700       5.65       1,789,671  
      6/6/07       25,000       18.16       259,000  
Roderike Pohl
    12/18/06       10,628       12.63       134,232  
 
 
(1) These awards were approved and effective on the grant dates pursuant to the terms of our 2004 Stock Incentive Plan in effect at the time of grant.
 
(2) Amounts represent the total grant date fair value of stock options granted in fiscal 2007 under SFAS No. 123(R). The assumptions used by us with respect to the valuation of options are set forth in Note 2 to our 2007 audited financial statements, which are included in the annual report that accompanies this Proxy Statement.


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Outstanding Equity Awards at Fiscal Year-End
 
The following table sets forth information regarding outstanding equity awards held as of September 30, 2007 by our named executive officers.
 
Outstanding Equity Awards at Fiscal Year-End 2007
 
                                 
    Option Awards  
    Number of
    Number of
             
    Securities
    Securities
             
    Underlying
    Underlying
             
    Unexercised
    Unexercised
    Option
    Option
 
    Options
    Options
    Exercise
    Expiration
 
Name
  Exercisable     Unexercisable     Price ($)     Date  
 
Solomon S. Steiner
    26,569       26,569 (1)     1.41       12/22/12  
      13,285       39,853 (2)     5.65       12/14/13  
            53,138 (3)     12.63       12/18/14  
            35,000 (4)     18.16       6/5/15  
Andreas Pfützner
    10,628       (5)     1.41       12/22/12  
      7,085       7,085 (6)     1.41       5/26/13  
            10,628 (7)     12.63       12/18/14  
            75,000 (8)     18.16       6/5/15  
Erik Steiner
    3,543       10,627 (9)     5.65       12/14/13  
            21,255 (10)     12.63       12/18/14  
            25,000 (11)     18.16       6/5/15  
F. Scott Reding
          141,700 (12)     5.65       10/31/14  
            25,000 (13)     18.16       6/5/15  
Roderike Pohl
    2,657       7,971 (14)     5.65       12/14/13  
            10,628 (15)     12.63       12/18/14  
 
 
(1) This option vests in four equal annual installments. The first two installments vested on December 23, 2005 and December 23, 2006. The third installment vested on December 23, 2007, after the completion of our 2007 fiscal year. The fourth installment will vest on December 23, 2008.
 
(2) This option vests in four equal annual installments. The first installment vested on December 15, 2006. The second installment vested on December 15, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 23, 2008 and 2009.
 
(3) This option vests in four equal annual installments. The first installment vested on December 19, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 19, 2008, 2009 and 2010.
 
(4) This option vests in four equal annual installments. The first installment will vest on June 6, 2008. The next installments will vest on June 6, 2009, 2010 and 2011.
 
(5) This option was fully vested as of September 30, 2007.
 
(6) This option vests in four equal annual installments. The first installment vested on May 27, 2006. The second installment vested on May 27, 2007. The next installments will vest on May 27, 2008 and 2009.
 
(7) This option vests in four equal annual installments. The first installment vested on December 19, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 19, 2008, 2009 and 2010.
 
(8) This option vests in four equal annual installments. The first installment will vest on June 6, 2008. The next installments will vest on June 6, 2009, 2010 and 2011.


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(9) This option vests in four equal annual installments. The first installment vested on December 15, 2006. The second installment vested on December 15, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 23, 2008 and 2009.
 
(10) This option vests in four equal annual installments. The first installment vested on December 19, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 19, 2008, 2009 and 2010.
 
(11) This option vests in four equal annual installments. The first installment will vest on June 6, 2008. The next installments will vest on June 6, 2009, 2010 and 2011.
 
(12) This option was scheduled to vest in four equal annual installments. In connection with Mr. Reding’s severance agreement, the vesting under this option was accelerated such that the option was vested for an aggregate of 90,000 shares and the balance was forfeited as of Mr. Reding’s November 13, 2007 resignation date.
 
(13) This option was scheduled to vest in four equal annual installments. In connection with Mr. Reding’s severance agreement, this option was forfeited as of Mr. Reding’s November 13, 2007 resignation date.
 
(14) This option vests in four equal annual installments. The first installment vested on December 15, 2006. The second installment vested on December 15, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 23, 2008 and 2009.
 
(15) This option vests in four equal annual installments. The first installment vested on December 19, 2007, after the completion of our 2007 fiscal year. The next installments will vest on December 19, 2008, 2009 and 2010.
 
Option Exercises and Stock Vested
 
In the fiscal year ended September 30, 2007, none of our named executive officers exercised any options to purchase shares of our common stock.
 
Potential Payments Upon Termination and Change of Control
 
Dr. Steiner, Dr. Pohl, and Mr. Steiner are each entitled to receive termination benefits that are not available to our employees generally. These benefits are provided pursuant to (1) employment agreements, in the case of Dr. Steiner and Dr. Pohl, and (2) a change of control and a severance agreement in the case of Mr. Steiner. In addition, our equity plans provide for certain acceleration of unvested equity awards upon our change of control.
 
As disclosed in our November 14, 2007 current report on Form 8-K, Mr. Reding resigned as our chief financial officer effective November 13, 2007. In connection with Mr. Reding’s resignation, we entered into a severance agreement with Mr. Reding, which is summarized below.
 
As is the case generally with regard to option grants to our employees, all of Dr. Pfützner’s unvested options will immediately vest upon a change of control pursuant to his stock option award agreement.
 
Employment Agreements with Dr. Steiner and Dr. Pohl
 
Our employment agreement with Dr. Steiner provides for an initial term of employment for the period from the date of the agreement to November 20, 2009 and will continue for successive one-year terms unless the agreement is terminated by either party on prior written notice in accordance with the terms of the agreement. In the event of a change of control, as defined below, the term is automatically extended for a period of two years from the effective date of the change of control. The agreement provides for an annual salary of $375,000 and eligibility to receive a bonus in cash in an amount of not more than 50% of his annual salary as determined by our board of directors in its discretion. Our board of directors is also required to consider the grant of stock or options to Dr. Steiner at least annually.
 
Our employment agreement with Dr. Pohl provides an initial term of employment for the period from the date of the agreement to December 30, 2009 and will continue for successive one-year terms unless the


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agreement is terminated by either party on prior written notice in accordance with the terms of the agreement. In the event of a change of control, as defined in the agreement, the term is automatically extended for a period of two years from the effective date of the change of control. The agreement provides for an annual salary of $150,000 and eligibility to receive a bonus in an amount determined by our board of directors in its discretion. Our board of directors is also required to consider the grant of stock or options to Dr. Pohl at least annually.
 
We may terminate Dr. Steiner’s or Dr. Pohl’s employment with or without cause. Neither Dr. Steiner nor Dr. Pohl is entitled to termination benefits if we terminate his or her employment for cause or if Dr. Steiner or Dr. Pohl resigns without good reason. If we terminate either Dr. Steiner’s or Dr. Pohl’s employment without cause, or if either Dr. Steiner or Dr. Pohl terminates his or her employment with us for good reason, each of Dr. Steiner and Dr. Pohl is entitled to the following for the longer of (a) two years following the termination date or (b) the balance of the term of his or her employment agreement:
 
  •  continuation of base salary, as in effect as of the termination date;
 
  •  medical insurance and other benefits substantially equivalent to the normal benefits we provide to our employees generally; and
 
  •  participation in our various retirement, welfare, fringe benefit and executive perquisite plans, programs and arrangements to the extent our senior executives generally are eligible for such programs.
 
In order to receive the above termination benefits, Drs. Steiner and Pohl must not do any of the following for so long as he or she is receiving termination benefits:
 
  •  engage in the business of delivering insulin by the oral, sublingual or injectable route of administration;
 
  •  recruit, solicit or induce, or attempt to induce any of our employees from terminating their employment with us or otherwise cease their relationship with us, or hire any such employee; and
 
  •  knowingly solicit, divert, limit or take away, or attempt to divert or to take away the business or patronage of any of our existing or prospective clients, customers, dealers, distributors, representatives or accounts.
 
In the event Dr. Steiner’s or Dr. Pohl’s employment with us terminates due to death or disability, Dr. Steiner or Dr. Pohl, or each or their respective estates, as the case may be, will receive the compensation benefits that would otherwise be payable or accrue to him or her under the agreement for an additional six months. Health benefits will continue for one year from the date of termination.
 
Pursuant to the terms of our employment agreements with Dr. Steiner and Dr. Pohl, the following terms have the following meanings:
 
  •  “cause” is generally defined to mean:
 
  •  a good faith finding by our board of directors of the failure of Dr. Steiner or Dr. Pohl to perform in any material respect his or her assigned duties for a period of ten days following written notice of the same;
 
  •  a good faith finding by our board of directors of Dr. Steiner’s or Dr. Pohl’s dishonesty, gross negligence or misconduct not involving any exercise of business judgment in good faith relating to the performance of his or her duties;
 
  •  a conviction or the entry of a pleading of guilty or nolo contendere by Dr. Steiner or Dr. Pohl to a crime involving moral turpitude or any felony; or
 
  •  the material breach by Dr. Steiner or Dr. Pohl of any terms his or her employment agreement that continues for ten days following written notice of the same.


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  •  “change of control” is generally defined to mean:
 
  •  a transaction that results in a person or group acquiring beneficial ownership of 50% or more of our voting stock, other than by us, one of our employee benefit plans, Dr. Steiner or any other entity in which Dr. Steiner holds a majority of the beneficial interests;
 
  •  our merger, consolidation or reorganization in which our stockholders immediately prior to the transaction hold less than 50% of the voting power of the surviving entity following the transaction, subject to certain limitations;
 
  •  a transaction in which we sell all or substantially all of our assets, subject to certain limitations;
 
  •  our liquidation; or
 
  •  any reorganization of our board of directors in which our incumbent directors cease for any reason to constitute a majority of our board of directors.
 
  •  “good reason” is generally defined to mean:
 
  •  our material breach of any terms of the employment agreement that continues for ten days following written notice of the same; or
 
  •  the assignment to Dr. Steiner or Dr. Pohl of any duties inconsistent in any material respect with his or her positions with us as set forth in the employment agreement.
 
Pursuant to Dr. Pohl’s employment agreement, “good reason” also includes the relocation of our principal executive offices to a location more than 50 miles away from the present location.
 
Change of Control Agreement and Severance Agreement with Mr. Steiner
 
Pursuant to our change of control agreement with Mr. Steiner, he is entitled to the following upon termination of employment with us occurring within two years of a change of control, unless such termination is by Mr. Steiner for other than good reason or by us for cause:
 
  •  annual base salary earned through the termination date;
 
  •  in the event Mr. Steiner satisfied the performance criteria for an annual bonus prior to termination, a portion of the annual bonus based on the number of days worked during the year;
 
  •  if the performance criteria were not achievable, an average bonus paid to Mr. Steiner over the last three fiscal years, or the average annual bonus;
 
  •  any compensation previously deferred by Mr. Steiner and any accrued paid time-off;
 
  •  annual base salary for a period of 18 months following the date of termination;
 
  •  health insurance and, under certain circumstances, life, disability and other insurance benefits for a period of 18 months or until Mr. Steiner qualifies for similar benefits from another employer;
 
  •  150% of the average annual bonus (paid in addition to the bonus described immediately above);
 
  •  acceleration of all outstanding options; and
 
  •  extension of the exercisability of options.
 
Under the change of control agreement, if we terminate Mr. Steiner for cause or Mr. Steiner terminates his employment with us without good reason, Mr. Steiner is not entitled to severance payments or other benefits.
 
In order to receive the above termination benefits that are not otherwise accrued as of the date of termination, Mr. Steiner must release us from any and all claims. In addition, Mr. Steiner may not solicit any of our employees during the period that he receives his annual base salary.


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Pursuant to the terms of the change of control agreement, the term “change of control” is generally defined in the same manner as in the employment agreements with Drs. Steiner and Pohl summarized above. In addition, the following terms have the following meanings:
 
  •  “cause” is generally defined to mean:
 
  •  Mr. Steiner’s refusal to carry out any material duties or any directions or instructions of our board of directors or senior management which are reasonably consistent with those duties;
 
  •  failure to perform satisfactorily any duties or any directions or instructions of our board of directors or senior management for ten days following written notice of the same;
 
  •  violation of a local, state or federal law involving the commission of a crime, other than minor traffic violations, or any other criminal act involving moral turpitude;
 
  •  gross negligence, willful misconduct, or the breach by Mr. Steiner of his duty to us involving self-dealing or personal profit;
 
  •  current abuse by Mr. Steiner of alcohol or controlled substances; deception, fraud, misrepresentation or dishonesty by Mr. Steiner; or any incident materially compromising Mr. Steiner’s reputation or ability to represent us with investors, customers or the public; or
 
  •  any other material violation of any provision of the change of control agreement for ten days following written notice of the same.
 
  •  “good reason” is generally defined to mean:
 
  •  a failure to grant Mr. Steiner the salary, bonus, and right to participate in fringe benefit programs that are otherwise afforded under the change of control agreement, other than an isolated and inadvertent failure not taken in bad faith that we remedy promptly receiving written notice of the same;
 
  •  a material diminution in Mr. Steiner’s position, authority, duties or responsibilities;
 
  •  our requiring Mr. Steiner to be based at any office or location that is more than fifty miles from the location of Mr. Steiner’s assigned worksite and Mr. Steiner’s residence immediately prior to the change of control;
 
  •  our non-renewal of the change of control agreement, provided that fewer than thirty days has elapsed since Mr. Steiner’s receipt of the notice of non-renewal;
 
  •  our failure to require any successor to our business (whether by purchase of assets, merger or consolidation) to assume our obligations under the change of control agreement; or
 
  •  any other material violation of the change of control agreement by us.
 
Pursuant to our severance agreement with Mr. Steiner, he is entitled to the following upon termination of employment with us, unless such termination is by Mr. Steiner for other than good reason or by us for cause:
 
  •  annual base salary earned through the termination date;
 
  •  in the event Mr. Steiner satisfied the performance criteria for an annual bonus prior to termination, a portion of the annual bonus based on the number of days worked during the year;
 
  •  if the performance criteria were not achievable, the average annual bonus;
 
  •  any compensation previously deferred by Mr. Steiner and any accrued paid time-off;
 
  •  annual base salary for a period of 18 months following the date of termination;
 
  •  health insurance and, under certain circumstances, life, disability and other insurance benefits for a period of 18 months or until Mr. Steiner qualifies for similar benefits from another employer;
 
  •  150% of the average annual bonus (paid in addition to the bonus described immediately above);


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  •  acceleration of all outstanding options; and
 
  •  extension of the exercisability of options.
 
The definitions of “good reason” and “cause” are generally the same under Mr. Steiner’s severance agreement as under his change of control agreement.
 
Under the agreement, if we terminate Mr. Steiner for cause or Mr. Steiner terminates his employment with us without good reason, Mr. Steiner is not entitled to severance payments or other benefits. In the event the severance agreement entitles Mr. Steiner to identical benefits under his change of control agreement, we will not duplicate coverage and Mr. Steiner will be only be entitled to such compensation payments and other benefits as available under one of the agreements.
 
In order to receive the above termination benefits that are not otherwise accrued as of the date of termination, Mr. Steiner must release us from any and all claims. In addition, Mr. Steiner may not solicit any of our employees during the period that he receiving his annual base salary.
 
Equity Plans
 
Each of our named executive officers holds outstanding unvested stock options that are subject to acceleration upon a change of control (i.e., a “single trigger”). These outstanding awards were granted pursuant to the terms of our 2004 Stock Incentive Plan in effect at the time of grant.
 
Estimated Payments
 
The table below sets forth the estimated payments to each of Dr. Steiner, Dr. Pfützner, Dr. Pohl, and Mr. Steiner upon the termination or change of control events described immediately above. The estimated payments are based on the assumption that the termination event occurred on September 30, 2007, the last day of the most recently completed fiscal year, and the stock price of our common stock was $17.04, the price of our common stock on September 30, 2007. The estimates below are based on these assumptions, as required by the rules of the SEC, while the actual amounts to be paid to each executive officer will be determinable only upon the actual termination event. In addition, the amounts set forth in the table below do not include any other payments that are available to our employees generally on a non-discriminatory basis.
 
Estimated Payments Upon a Change of Control
 
                                 
    Estimated Total
    Estimated Total
             
    Value of Cash
    Value of
             
    Payment
    Benefits
    Estimated Total
       
    (Salary,
    Coverage
    Value of Equity
    Total Change of
 
Named Executive Officer   Bonus     Continuation(1)     Acceleration(2)     Control Benefits  
 
Solomon S. Steiner
  $ 500,000     $ 29,501     $ 2,716,415     $ 3,245,916  
Andreas Pfützner(3)
  $     $     $ 1,308,006     $ 1,308,006  
Erik Steiner
  $ 331,250     $ 6,924     $ 603,642     $ 941,816  
Roderike Pohl
  $ 300,000     $ 13,617     $ 362,202     $ 675,819  


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Estimated Severance Payments
 
                                 
    Estimated Total
    Estimated Total
             
    Value of Cash
    Value of
             
    Payment
    Benefits
    Estimated Total
    Total
 
    (Salary,
    Coverage
    Value of Equity
    Termination
 
Named Executive Officer   Bonus     Continuation(1)     Acceleration(2)     Benefits  
 
Solomon S. Steiner
  $ 500,000     $ 29,501     $     $ 529,501  
Andreas Pfützner(3)
  $     $     $     $  
Erik Steiner
  $ 331,250     $ 6,924     $ 603,642     $ 941,816  
Roderike Pohl
  $ 300,000     $ 13,617     $     $ 313,617  
 
 
(1) Consists of medical insurance coverage. The value is based upon the type of insurance coverage we carried for each named executive officer as of September 30, 2007 and is valued at the premiums in effect on September 30, 2007.
 
(2) Assumes the exercise and sale of all in-the-money outstanding options held by each named executive officer on September 30, 2007, on which the closing price of our common stock on the Nasdaq Global Market was $17.04
 
(3) Dr. Pfützner’s salary is determined by the terms of his consulting agreement with us pursuant to which he is entitled to receive a non-refundable retainer of $150,000, payable on or after June 5, 2008.
 
Severance Agreement with Mr. Reding
 
Mr. Reding served as our chief financial officer, chief accounting officer and treasurer during fiscal 2007. Effective November 13, 2007, Mr. Reding resigned from all his positions with the Company. Pursuant to a severance agreement we entered into with him, Mr. Reding received the following severance benefits:
 
  •  a lump sum payment of approximately $91,000, less taxes and withholdings;
 
  •  $45,000 as reimbursement for certain legal fees;
 
  •  continuation of base salary until November 30, 2009;
 
  •  continuation of health coverage at a benefit level comparable to that in effect at Mr. Reding’s resignation, as well as life and disability insurance;
 
  •  accelerated vesting of options to purchase 54,575 shares of common stock at an exercise price of $5.65 per share; and
 
  •  extension until October 31, 2014 of the period during which options to purchase an aggregate of 90,000 shares of common stock at an exercise price of $5.65 are exercisable.
 
In order to receive severance benefits described above, Mr. Reding must not do any of the following for so long as he is receiving severance benefits:
 
  •  engage in the business of delivering insulin by the oral, sublingual or injectable route of administration;
 
  •  recruit, solicit or induce, or attempt to induce any of our employees from terminating their employment with us or otherwise cease their relationship with us, or hire any such employee; and
 
  •  knowingly solicit, divert, limit or take away, or attempt to divert or to take away the business or patronage of any of our existing or prospective clients, customers, dealers, distributors, representatives or accounts.
 
In addition, we and Mr. Reding each agreed to release the other from any and all claims that may have existed as of the resignation date. Mr. Reding has agreed to keep confidential and not disclose all non-public information concerning us that he acquired during his employment with us.


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Compensation Committee Interlocks and Insider Participation
 
None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee. None of the members of our compensation committee has ever been our employee.
 
Compensation Committee Report
 
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management. Based on this review and discussion, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
 
This compensation committee report is not incorporated by reference into any of our previous or future filings with the SEC, unless any such filing explicitly incorporates the report.
 
By the compensation committee of the board of directors of Biodel Inc.
 
Respectfully submitted,
 
Dr. Cha (Chair)
Dr. Lieberman
Dr. Sanders
Mr. Weisman
 
Securities Authorized for Issuance under Equity Compensation Plans
 
The table below provides information relating to our equity compensation plans as of September 30, 2007.
 
                         
                Number of securities
 
                remaining available
 
                for future issuance
 
    Number of securities
          under equity
 
    to be issued upon the
    Weighted-average
    compensation plans
 
    exercise of outstanding
    exercise price of
    (excluding securities
 
    options, warrants and
    outstanding options,
    reflected in column
 
Plan Category
  rights     warrants and rights($)     (a))  
    (a)     (b)     (c)  
 
Equity compensation plans approved by security holders
    1,685,974 (1)     6.80       3,510,484 (2)
Equity compensation plans not approved by security holders
                 
Total
    1,685,974       6.80       3,510,484  
 
 
(1) Includes information regarding the following plans: 2004 Stock Incentive Plan, as amended, 2005 Employee Stock Purchase Plan and 2005 Non-Employee Directors’ Stock Option Plan.
 
(2) Represents 3,510,484 shares of common stock remaining available for issuance pursuant to awards under the 2004 Stock Incentive Plan, as amended, 2005 Employee Stock Purchase Plan and 2005 Non-Employee Directors’ Stock Option Plan.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
Registration Rights
 
We have granted registration rights, subject to certain limitations and restrictions, to Great Point Partners I, L.P. and entities affiliated with Vivo Ventures and OrbiMed Advisors, LLC, holders of 5% or more of our


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voting securities, and to Solomon Steiner, Andreas Pfützner, R. Timmis Ware and Scott Weisman, who are our executive officers and directors.
 
Subject to specified limitations, the holders of a majority of the shares of common stock entitled to registration rights may require us to, on not more than two occasions, file a registration statement under the Securities Act covering all or part of the common stock owned by such stockholders. Subject to certain limitations, these stockholders are entitled to notice and to include their shares of common stock in any registration of our common stock initiated either for our own account or for the account of our other securityholders.
 
Consulting Services
 
On April 1, 2005, we entered into a consulting agreement with Dr. Andreas Pfützner, our chief medical officer, to provide consulting services to us in connection with the research and development of our product candidates. The consulting agreement was amended and restated effective June 5, 2007. The initial term of the amended and restated agreement terminates on June 5, 2009 and will automatically renew for successive one-year terms unless the agreement is terminated by either party on prior written notice in accordance with the terms of the agreement. In addition, Dr. Pfützner is entitled to receive a retainer of $150,000 per annum for the two-year period commencing June 5, 2007. The agreement provides for compensation of $2,000 for each full business day Dr. Pfützner devoted to the performance of his services. Dr. Pfützner is bound by non-competition and non-solicitation covenants that prohibit him from competing with us during the term of the agreement and for one year after termination of the agreement.
 
Director Compensation
 
Please see “Director Compensation” for a discussion of options granted and other compensation to our non-employee directors.
 
Executive Compensation
 
Please see “Executive Compensation” for additional information on compensation of our executive officers. Information regarding (1) employment agreements with Solomon Steiner and Roderike Pohl, (2) a severance agreement and a change of control agreement with Erik Steiner and (3) a severance agreement with F. Scott Reding is set forth under “Executive Compensation — Potential Payments Upon Termination and Change of Control.”
 
POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS
 
Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), each of whom we refer to as a “related person,” has a direct or indirect material interest.
 
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our general counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our audit committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the audit committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chairman of the audit committee to review and, if deemed appropriate, approve proposed related person transactions that arise between audit committee meetings, subject to ratification by the audit committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.


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A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the audit committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the audit committee will review and consider:
 
  •  the related person’s interest in the related person transaction;
 
  •  the approximate dollar value of the amount involved in the related person transaction;
 
  •  the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
 
  •  whether the transaction was undertaken in the ordinary course of our business;
 
  •  whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party;
 
  •  the purpose of, and the potential benefits to us of, the transaction; and
 
  •  any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
 
The audit committee may approve or ratify the transaction only if the audit committee determines that, under all of the circumstances, the transaction is in, or not inconsistent with, our best interests. The audit committee may impose any conditions on the related person transaction that it deems appropriate.
 
In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our board of directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:
 
  •  interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of that entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in the entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction and (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction, and
 
  •  a transaction that is specifically contemplated by provisions of our charter or bylaws.
 
The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the compensation committee in the manner specified in its charter.
 
AUDIT COMMITTEE REPORT
 
The audit committee has reviewed our audited financial statements for the fiscal year ended September 30, 2007 and discussed them with our management and our registered public accounting firm.
 
The audit committee has also received from, and discussed with, our registered public accounting firm various communications that our registered public accounting firm is required to provide to the audit committee, including the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards , Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
 
The audit committee has received the written disclosures and the letter from our registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees ), as adopted by the Public Company Accounting Oversight Board in Rule 3600T, and has discussed with our registered public accounting firm their independence. Independence Standards Board Standard No. 1 requires auditors annually to disclose in writing


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all relationships that in the auditor’s professional opinion may reasonably be thought to bear on independence, confirm their perceived independence and engage in a discussion of independence.
 
Based on the review and discussions referred to above, the audit committee recommended to our board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended September 30, 2007.
 
This audit committee report is not incorporated by reference into any of our previous or future filings with the SEC, unless any such filing explicitly incorporates this report.
 
By the audit committee of the board of directors of Biodel Inc.
 

Respectfully submitted,

Dr. Lieberman (Chair)
Dr. Pereira
Mr. Kroin
Mr. Weisman
 
Auditors’ Fees
 
The following table sets forth the aggregate fees for services billed to us by BDO Seidman, LLP, our independent registered public accounting firm, for each of the last two fiscal years:
 
                 
Fee Category   2007     2006  
 
Audit Fees
  $ 494,216     $ 36,928  
Audit-related Fees
           
Tax Fees
    30,000        
All Other fees
           
Total Fees
  $ 524,216     $ 36,928  
 
 
(1) Audit fees consist of fees for the audit of our September 30, 2007 and 2006 financial statements, the review of the interim financial statements included in our quarterly reports on Form 10-Q, the review of our registration statement on Form S-1 effective with the SEC on May 10, 2007, and other professional services provided in connection with statutory and regulatory filings or engagements.
 
(2) Tax fees consist of fees for tax compliance. Tax compliance services, which relate to preparation of original and amended tax returns, claims for refunds and tax payment-planning services.
 
Pre-Approval Policies and Procedures
 
Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the audit committee or the engagement is entered into pursuant to one of the pre-approval procedures described below.
 
From time to time, our audit committee may pre-approve specified types of services that are expected to be provided to us by our registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.


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AGENDA ITEM 2:
 
 
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
Our board of directors has selected BDO Seidman, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2008. Although stockholder approval of our board of directors’ selection of BDO Seidman, LLP is not required by law, we believe that it is advisable to give stockholders an opportunity to ratify this selection. If our stockholders do not ratify this selection, then our board of directors will reconsider the selection. We expect that a representative of BDO Seidman, LLP, which served as our auditors for the year ended September 30, 2008, will be present at the Annual Meeting to respond to appropriate questions, and to make a statement if he or she wishes.
 
Our board of directors unanimously recommends a vote FOR the ratification of the appointment of BDO Seidman, LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2008.
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Exchange Act requires our directors, officers and stockholders who beneficially own more than 10% of any class of our equity securities registered pursuant to Section 12 of the Exchange Act to file initial reports of ownership and reports of changes in ownership with respect to our equity securities with the SEC. All reporting persons are required by the SEC’s regulations to furnish us with copies of all reports that such reporting persons file with the SEC pursuant to Section 16(a).
 
Based solely on our review of the copies of such forms received by us and upon written representations of our reporting persons received by us, except as described below, each such reporting person has filed all of their respective reports pursuant to Section 16(a) on a timely basis. Andreas Pfützner failed to timely file a Form 4 with respect to the grant of an option award on June 6, 2007. Dr. Pfützner filed such information on a Form 4 with the SEC on July 2, 2007. Erik Steiner failed to timely file a Form 4 with respect to the grant of an option award on June 6, 2007. Mr. Steiner filed such information on a Form 4 with the SEC on June 27, 2007. Solomon Steiner failed to timely file a Form 4 with respect to the grant of an option award on June 6, 2007. Dr. Steiner filed such information on a Form 4 with the SEC on June 27, 2007. F. Scott Reding failed to timely file a Form 4 with respect to the grant of an option award on May 16, 2007. Mr. Reding filed such information on a Form 4 with the SEC on June 26, 2007. R. Timmis Ware failed to timely file a Form 4 with respect to the grant of an option award on June 6, 2007. Mr. Ware filed such information on a Form 4 with the SEC on June 26, 2007.
 
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 2009
 
Any stockholder proposal pursuant to Rule 14a-8 of the rules promulgated under the Exchange Act, in order for such proposal to be included in the Proxy Statement for our annual meeting of stockholders in 2009, must be received by our corporate secretary at our principal office in Danbury, Connecticut, no later than September 24, 2008. The submission by a stockholder of a proposal for inclusion in the Proxy Statement is subject to regulation by the SEC.
 
If you wish to present a proposal or a proposed director candidate at the 2009 annual meeting of stockholders, but do not wish to have the proposal or director candidate considered for inclusion in the proxy statement and proxy card, you must also give written notice to us at the address noted below. We must receive this required notice not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the 2008 Annual Meeting. However, if the date of the 2009 Annual Meeting is advanced more than 30 days prior to or delayed by more than 30 days after first anniversary of the 2008 Annual Meeting, then we must receive the required notice no earlier than the close of business on the 120th day prior to the 2009 Annual Meeting and no later than the close of business on the later of (1) the 90th day prior to the 2009 Annual Meeting or (2) the 10th day following the date public announcement of the date of such annual meeting is first made.


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HOUSEHOLDING OF ANNUAL MEETING MATERIALS
 
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement and annual report to stockholders may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you if you call or write us at the address or telephone number listed above. If you want to receive separate copies of our proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder, or you may contact us at the above address and phone number.
 
OTHER MATTERS
 
Our board of directors is not aware of any other matters that are likely to be brought before the Annual Meeting. If other matters are properly brought before the Annual Meeting, including a proposal to adjourn the Annual Meeting to permit the solicitation of additional proxies in the event that one or more proposals have not been approved by a sufficient number of votes at the time of the Annual Meeting, the persons named in the enclosed proxy will vote on such matters in their own discretion.
 
GENERAL
 
The accompanying proxy is solicited by and on behalf of our board of directors, whose notice of Annual Meeting is attached to this Proxy Statement, and the entire cost of such solicitation will be borne by us.
 
In addition to the use of the mails, proxies may be solicited by personal interview, telephone and telegram by directors, officers and our other employees who will not be specially compensated for these services. We will also request that brokers, nominees, custodians and other fiduciaries forward soliciting materials to the beneficial owners of shares held of record by such brokers, nominees, custodians and other fiduciaries. We will reimburse such persons for their reasonable expenses in connection therewith.
 
Certain information contained in this Proxy Statement relating to the occupations and security holdings of our directors and officers is based upon information received from the individual directors and officers.
 
WE WILL FURNISH, WITHOUT CHARGE, A COPY OF OUR REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 2007, INCLUDING FINANCIAL STATEMENTS AND SCHEDULE THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF OUR STOCKHOLDERS OF RECORD ON JANUARY 7, 2008, AND TO EACH BENEFICIAL STOCKHOLDER ON THAT DATE UPON WRITTEN REQUEST MADE TO CORPORATE SECRETARY, BIODEL INC., 100 SAW MILL DRIVE, DANBURY, CONNECTICUT 06810. A REASONABLE FEE WILL BE CHARGED FOR COPIES OF REQUESTED EXHIBITS.
 
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
 
 

By Order of the Board of Directors,
 
/s/  R. Timmis Ware
R. Timmis Ware
Secretary
 
Danbury, Connecticut
Dated: January 18, 2008


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(PROXYCARD)
? FOLD AND DETACH HERE AND READ THE REVERSE SIDE ? ANNUAL MEETING OF STOCKHOLDERS OF BIODEL INC. February 28, 2008 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THE UNDERSIGNED APPOINTS SOLOMON S. STEINER AND GERARD MICHEL AND EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH THE FULL POWER OF SUBSTITUTION, AND AUTHORIZES EACH OF THEM TO REPRESENT AND VOTE, AS DESIGNATED ON THE REVERSE HEREOF, ALL OF THE SHARES OF COMMON STOCK OF BIODEL INC., HELD OF RECORD BY THE UNDERSIGNED AT THE CLOSE OF BUSINESS ON JANUARY 7, 2008 AT THE ANNUAL MEETING OF STOCKHOLDERS OF BIODEL INC. TO BE HELD ON FEBRUARY 28, 2008 OR AT ANY ADJOURNMENT THEREOF. The Board of Directors recommends a vote FOR each of the listed proposals. This Proxy, when properly executed, will be voted as specified above. THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED. THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO SPECIFICATION IS MADE AND THIS PROXY IS RETURNED, THIS PROXY WILL BE VOTED IN FAVOR OF THE ELECTION OF THE NOMINEES LISTED ABOVE AND IN FAVOR OF THE OTHER PROPOSALS. PLEASE SIGN, DATE AND MAIL THIS PROXY CARD TO THE COMPANY PROMPTLY.

 


 

(PROXYCARD)
? FOLD AND DETACH HERE AND READ THE REVERSE SIDE ? Please mark your votes X like this PROXY 1. To elect three Class I directors for a term of three years: FOR            AGAINST ABSTAIN ELECTION OF FOR the nominees WITHHOLD AUTHORITY FOR ALL EXCEPT 2. To ratify the appointment of BDO Seidman, LLP as the independent DIRECTORS listed below to vote for the nominees as indicated to the registered public accounting firm for the fiscal year ending            listed below contrary below September 30, 2008. Nominees: 01 Albert Cha 02 David Kroin 03 Samuel Wertheimer INSTRUCTION: To withhold authority to vote for any individual nominee, mark “For All Except” and write that nominee’s name in the space provided below: EXCEPTIONS COMPANY ID: PROXY NUMBER: ACCOUNT NUMBER: Signature Signature            Date      , 2008. Please sign exactly as the name appears on your stock certificate. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by the President or other authorized officer. If a partnership, please sign in partnership name by an authorized person.