Criticizes Immunomedics’ Recent Disingenuous
and Misleading Statements
Urges Stockholders to Support Meaningful
Change and Put in Place Experienced and Capable Oversight at Board
Level
Vote Today on the GOLD Proxy Card for venBio’s Four Highly-Qualified
Nominees
venBio Select Advisor LLC (“venBio”), the beneficial owner of
approximately 10.5 million shares, or 9.9%, of Immunomedics, Inc.
(NASDAQ: IMMU) (“Immunomedics” or the “Company”) and its largest
stockholder, today sent a letter to Immunomedics stockholders in
connection with venBio’s nomination of four highly-qualified
candidates – Scott Canute, Peter Barton Hutt, Dr. Khalid Islam, and
Dr. Behzad Aghazadeh – for election to the Company’s Board of
Directors (the “Board”) at the upcoming 2016 Annual Meeting of
stockholders, which is currently scheduled to be held on February
16, 2017.
The full text of the letter follows:
January 18, 2017
Dear Fellow Stockholders:
You, our fellow stockholders, are charged with deciding between
two very different courses of action at the upcoming 2016 Annual
Meeting of Immunomedics stockholders. Will
you vote for real change that can unlock value for all
stockholders, or will you allow the current leadership of
Immunomedics to perpetuate the mistakes of the past? We
strongly urge you to choose the first option.
We believe that decisive change is
sorely needed to correct the course of strategic missteps,
mismanagement, and cronyism that has characterized the
management and oversight of Immunomedics. That is why we have
proposed a slate of four highly-qualified and credentialed nominees
who have direct experience in the specific areas needed to effect
change at the Company and unlock value for all stockholders. This
includes experience in pharmaceutical development and breast
cancer, commercial manufacturing and regulatory issues,
pharmaceutical partnering and deal making, and an understanding of
the capital markets. We believe that our
candidates possess these abilities in spades, while the nominees
put forth by Immunomedics do not.
We understand why this has become a contentious situation.
However, we are deeply disappointed that
Immunomedics’ recent communications have contained a number of
falsehoods and inaccuracies related to our efforts to
create value for all the Company’s stockholders. This becomes
crystal clear under close examination of some of the Company’s
recent statements. Let’s look at the claims versus the facts.
- Claim: “venBio’s demands for
representation and unilateral veto rights are especially
unreasonable relative to the size of its stake in the
company.”
- Fact: As venBio’s largest
stockholder, our interests are directly aligned with investors,
which is why we are fighting for truly independent representation
at the Board level, as evidenced by the fact that three of our four
nominees are independent of venBio.
- We believe that the track record of
Immunomedics’ current Board and management shows they are a direct
obstacle to maximizing value for all stockholders.
- Based on this belief, the only way to
create value for all investors is to remove the obstacles. This
requires having independent and experienced stockholder
representatives on the Board in a substantial capacity to directly
impact outcomes.
- There are no second chances in this
situation. The right Board and leadership are needed not only to
achieve a strong partnership deal that unlocks the full value of
Immunomedics’ IMMU-132 asset, but also to
oversee the successful execution of any deal and the growth of the
Company moving forward. That is why we believe our slate of
highly-qualified and experienced candidates are the right choice,
at the right time, for Immunomedics.
- Claim: “venBio’s actions and stated
plans could have unintended consequences by triggering statutory
and contractual change of control provisions…”
- Fact: The Company’s suggestions that
venBio’s actions would trigger various change in control provisions
are flat out wrong, highly misleading, and are a transparent
attempt to scare stockholders into giving them support.
- Immunomedics states a change in
composition of the Board could lead to a loss of the Company’s net
operating loss carryforwards (“NOLs”). The truth is that a change
in the Board does NOT affect
the Company’s NOLs. Merely electing venBio's nominees has nothing
to do with the NOLs, as even a minimal tax analysis by the Company
would have revealed. As part of the Company's scare tactics, they
are even willing to mislead stockholders as to the actual amount of
available NOLs, overstating them by what we believe is more than $100 million.1
- While the Company correctly notes that
equity awards would accelerate for employees, what the Company
neglects to mention is that the current Board has the ability to
avoid this situation, simply by passing a resolution endorsing
venBio’s nominees immediately before the date of election for the
narrow purpose of those agreements. Therefore, ultimately triggering accelerated vesting is up to the
Board and their willingness to act in the best interest of their
stockholders.
- Additionally, the Company states it
would be “forc[ed]” into making “significant payments of up to $15
million from change of control provisions in management employment
contracts.” Not only are a large portion of such payments avoidable
if, as discussed above, the incumbent Board endorses venBio’s
nominees, but also the suggestion here that the Company is not
capable of paying the golden parachutes that it awarded to
management (which at that point constituted 40% of the Board) is a
perfect example of how the Board has completely failed to act as a
good fiduciary for all stockholders, and exemplifies the degree to
which it has focused solely on enriching itself. If paying out
these golden parachutes would have such deleterious effects on the
Company, why did the Board agree to them or allow the Company to
get to be in such bad financial straits that they couldn’t afford
the payments?
- To be perfectly clear, venBio is not
seeking a “change in control” in the way characterized by
Immunomedics, and we are not a private equity firm engaging in this
proxy contest to sell the company or take it private. venBio is a
New York-based investment manager seeking board representation at a
company we believe needs change in order to benefit all
stockholders.
- Claim: “We believe that, the venBio
nominees, if elected, would delay the progress of IMMU-132 by
up to two years…”
- Fact: This claim is completely
baseless and false.
- There is no evidence that changes at
the Board level would delay approvals for IMMU-132.
- A delay would only be certain if the
Company or its principals took intentional steps to harm
stockholders, such as through a “loss of key personnel in clinical,
CMC, regulatory, science, and administration.” This is more of a
threat than an indication of what would happen—at no point would a
change in composition of the Board necessarily lead to a loss in
key personnel. So again, Immunomedics is relying on threatening its
own stockholders with negative outcomes that could only be
guaranteed by self-sabotage on the part of the existing Board and
management.
- If our campaign is successful, our goal
would be to ensure employee continuity, and we would strive to help
the hard-working and loyal employees of Immunomedics reach the
financial and scientific successes they deserve. This shared
success across the organization is in stark contrast to the
self-enrichment policies characterizing how the current management
and Board have operated.
- Claim: “venBio rejected [. . .]
alternative proposals, stating that it will not back down from its
full demands.”
- Fact: The Company claims we were
unreasonable in settlement negotiations when we have negotiated in
good faith.
- We completely disagree with the
Company’s attempts to paint us as unreasonable negotiators. We
negotiated in good faith under agreed confidentiality and made a
counter proposal at the invitation of the Company's advisors. In
stark contrast, the Company unilaterally ended negotiations the
night after soliciting our proposal for resolving this situation,
unilaterally determined to make public details of the negotiations
in what we believe is a jaded fashion and while now claiming to be
open to compromise, turned around and suddenly nominated a slate of
directors.
- Claim: “In fact, our newly appointed
Vice Chairman and future Chairman, Jason Aryeh, was initially
sought out by venBio as a potential candidate for the venBio slate
of nominees.”
- Fact: We never asked Jason Aryeh to
join our slate of nominees.
- While we discussed Immunomedics
informally with Jason Aryeh prior to deciding to take action at the
Company, we never offered Mr. Aryeh a
position on our slate of nominees.
- In fact, not only did venBio never
offer Mr. Aryeh a place on our slate, on not one but several
occasions we made it clear to the Company, its financial advisors
and Mr. Aryeh himself that we would not find him to be a suitable
board candidate or Chairman for Immunomedics. We made clear this
was due to his lack of sufficient scientific, regulatory or
pharmaceutical manufacturing expertise – key areas of need for the
Company at this time.
- As a result, we take issue with the
statement in the Company’s press release that they believe that
“venBio must implicitly support Mr. Aryeh." For all the reasons
stated above, this assumption is inaccurate. Let us be explicit: we do not support Mr. Aryeh as a
director or Chairman for Immunomedics.
- On a related note, we are surprised
that despite having engaged a search firm and ostensibly conducting
a search “process” for potential directors, Immunomedics has put
forth a slate of individuals who are highly
interconnected and who in several cases have existing
relationships with each other and the Company’s advisors from prior
enterprises.
- Claim: “…they shockingly don't even
want to allow any stockholders besides them to have the right to
vote on any strategic transaction.”
- Fact: This statement is designed to
confuse stockholders and belies a complete misunderstanding of how
pharmaceutical partnership deals are forged.
- It is the norm for partnership deals to
be voted on by a company’s board but not be subject to a full vote
of all stockholders. This is because, unlike in an M&A
transaction, potential partners predominantly are not amenable to
negotiating for a transaction that will be atypically opened to the
unnecessary delay and uncertainty of a shareholder vote
process.
- The Company falsely suggests that a
Board comprised of our nominees would vote on such a deal as a
means for us to control any transaction. This repeats the false
implication that we are seeking control of the Company when in fact
venBio will only have one nominee on the Board.
Ultimately, we want what is best for all stockholders, and we
believe our extremely well-qualified nominees have what it takes to
achieve this. The bottom line is that the
slate of nominees proposed by Immunomedics represents the same
cronyism and lack of credibility that have characterized the
Company’s leadership to date. This slate is comprised of
individuals who are highly interconnected and would lack the
independence needed to improve corporate governance and enhance
oversight of management. Furthermore, they lack the important
skills and experience needed to reach a deal to maximize the value
of IMMU-132 or to understand the complexities of assessing
potential offers. As we have made clear, we believe the following
areas of expertise are needed in a slate of nominees for the Board
of Immunomedics:
- Pharmaceutical Development Background
and Breast Cancer Expertise
- Commercial Manufacturing Expertise
- Regulatory Expertise
- Good Management Skills and Corporate
Governance Know-How
- Pharmaceutical Partnering/Deal Making
Experience
- Capital Markets Expertise
Our highly-qualified nominees – Scott Canute, Peter Barton Hutt,
Dr. Khalid Islam, and me – collectively satisfy all of these
requirements and would be well-placed to work to the benefit of all
Immunomedics stockholders.
Now is the time for change at
Immunomedics in order to maximize the value of the Company’s
assets, especially IMMU-132, and take steps to end the array of
strategic missteps and failures at the Company.
We strongly urge you to support our four
nominees for the Board in order to build true and lasting value for
all stockholders.
Vote FOR all four of our Nominees on
the GOLD Proxy Card Today.
Sincerely,
Dr. Behzad Aghazadeh
About venBio Select Advisor LLC
venBio Select Advisor LLC (“venBio Select”) is the SEC
registered investment manager for venBio’s public markets strategy
and its main equity investment vehicle – the venBio Select Fund –
which primarily invests across the biotechnology and therapeutics
sector. The venBio Select Fund is managed by Dr. Behzad Aghazadeh,
supported by a team of seasoned professionals with advanced medical
and scientific backgrounds, and extensive investment experience in
the biopharmaceutical industry. The investment and business
operations for venBio Select are based in New York. venBio’s
separate venture capital team operates and manages their funds from
San Francisco, partnering with industry leaders to build
biotechnology companies with a focus on novel therapeutics for
unmet medical needs.
About the Proxy Solicitation
venBio Select Advisor LLC, Behzad Aghazadeh, Scott Canute, Peter
Barton Hutt and Khalid Islam (collectively, the “Participants”)
have filed with the Securities and Exchange Commission (the “SEC”)
a definitive proxy statement and accompanying form of proxy to be
used in connection with the solicitation of proxies from the
stockholders of Immunomedics (the “Company”). All stockholders of
the Company are advised to read the definitive proxy statement and
other documents related to the solicitation of proxies by the
Participants, as they contain important information, including
additional information related to the Participants. The definitive
proxy statement and an accompanying proxy card is being furnished
to some or all of the Company’s stockholders and is, along with
other relevant documents, available at no charge on the SEC website
at http://www.sec.gov/ or from Okapi Partners at 212-297-0720 or
info@okapipartners.com.
Information about the Participants and a description of their
direct or indirect interests by security holdings is contained in
the definitive proxy statement on Schedule 14A filed by the
Participants with the SEC on December 6, 2016. This document is
available free of charge from the sources indicated above.
Warning Regarding Forward Looking Statements
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS. FORWARD
LOOKING STATEMENTS CAN BE IDENTIFIED BY USE OF WORDS SUCH AS
"OUTLOOK", "BELIEVE", "INTEND", "EXPECT", "POTENTIAL", "WILL",
"MAY", "SHOULD", "ESTIMATE", "ANTICIPATE", AND DERIVATIVES OR
NEGATIVES OF SUCH WORDS OR SIMILAR WORDS. FORWARD LOOKING
STATEMENTS IN THIS PRESS RELEASE ARE BASED UPON PRESENT BELIEFS OR
EXPECTATIONS. HOWEVER, FORWARD LOOKING STATEMENTS AND THEIR
IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR AS A
RESULT OF VARIOUS RISKS, REASONS AND UNCERTAINTIES. EXCEPT AS
REQUIRED BY LAW, VENBIO AND ITS AFFILIATES AND RELATED PERSONS
UNDERTAKE NO OBLIGATION TO UPDATE ANY FORWARD LOOKING STATEMENT,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR
OTHERWISE.
1 venBio’s legal analysis shows that Immunomedics’ claim of
$397.2 million of income that can be offset by NOLs is $108.5
million greater than the true number, $288.7 million. The $108.5
million discrepancy simply constitutes state tax NOLs—those NOLs
that offset the same income as the $288.7mm of the Federal NOLs,
just in a smaller amount.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170118006202/en/
InvestorOkapi Partners LLCBruce H. Goldfarb / Lydia
Mulyk, 212-297-0720info@okapipartners.comorMediaSloane &
CompanyDan Zacchei / Joe Germani, 212-486-9500dzacchei@sloanepr.com
/ jgermani@sloanepr.com
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