venBio Committed to Delivering Much-needed
Change at Immunomedics
Believes Immunomedics Lawsuit to Silence
Stockholders is Baseless
venBio’s Four Board Nominees Have the Right
Experience, Capabilities, and Independence to Chart Best Course
Forward for ALL Stockholders – Including Fairly Evaluating the
Seattle Genetics Partnership and Any Potentially Superior
Alternatives
Vote on the GOLD Proxy Card for venBio’s Four Highly-Qualified
Nominees Today
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 March 3,
2017.
The full text of the letter follows:
Dear Fellow Stockholders:
With the Immunomedics Annual Meeting quickly approaching,
you, our fellow stockholders, face a critical
choice. Will you allow the same type of self-enrichment and
strategic missteps that have characterized Immunomedics for decades
to continue unchecked? Or will you elect Board members who have
deep experience in the areas that are specifically relevant to
Immunomedics’ future success and the independence to truly act in
your best interests?
As you carefully consider this important decision, we urge you
to keep in mind the following facts:
- Immunomedics’ management and Board
have an established track record of acting in the best interests of
themselves – not all stockholders.
- As a result of repeated strategic
missteps, the Company has brought ZERO drugs to market over the
course of its entire 35-year history.
- While stockholders have suffered
through the Company’s serial capital dilutions and decades-long
share price underperformance, the husband-wife team of Chief
Scientific Officer David Goldenberg (“Dr. Goldenberg”) and Chief
Executive Officer Cynthia Sullivan (“Ms. Sullivan”) – who have
occupied nearly half the Board until recently – have generously
rewarded themselves at stockholders’ expense – paying themselves nearly $45mm in
compensation.1
- Notably, Dr. Goldenberg was paid $4.2M
in FY2016, including $3.4M of stock awards, while the Company’s
share price declined 41%. Ms. Sullivan was paid $1.4M during the
same period, including $350K in stock awards despite a failure to
achieve any of the Company’s stated goals. 2
- The Board’s decision to allow Dr.
Goldenberg to allocate IMMU product ownership rights between the
Company and a subsidiary that he partially owns is emblematic of
the Board’s acquiescence to management.
- As Adam Feuerstein, a reporter at
investment publication TheStreet, noted: “Thirty-five years of
continuous R&D without an approved drug is an astounding record
of futility, made worse by feckless corporate governance that has
allowed [Dr. David] Goldenberg and [his wife, CEO Cynthia] Sullivan
to each make millions of dollars in salary, bonuses, related-party
consulting fees and stock grants, all at shareholder
expense.”3
- venBio launched a proxy contest,
nominating four highly-qualified candidates for the Board to
finally bring the oversight we believe Immunomedics desperately
needs in alignment with the interests of all stockholders.
- As Immunomedics’ largest investor, we
want the best outcome for all stockholders – the true owners of the
Company. This is why we could not sit idly by
and let the value of Immunomedics be further squandered, and
instead chose to nominate four highly-qualified nominees – Scott
Canute, Peter Barton Hutt, Dr. Khalid Islam, and myself – to the
Board.
- Our nominees were deliberately and thoughtfully recruited based on their
deep mix of experience in pharmaceutical development and
breast cancer, commercial manufacturing and regulatory issues,
pharmaceutical partnering and deal making, and an understanding of
the capital markets.
- Our nominees will bring an independent
approach to the Board and build a culture of strong oversight and
effective management to drive value at the Company and rapidly
deliver IMMU-132 to patients in need.
- venBio is completely aligned with
stockholders. Unlike some members of the current Board and
management, our only interest in the Company is through our
stockholdings – not through personal ownership stakes in
subsidiaries, royalty arrangements and other perks.
- Independent third-parties and other
stockholders have recognized that venBio’s slate is the best path
for Immunomedics.
- In an extremely rare occurrence,
the three leading proxy advisory firms – ISS,
Glass Lewis, and Egan Jones – ALL supported venBio’s full
slate.
- With regard to our slate’s ability to
lead Immunomedics forward, Glass Lewis noted: “… [W]e find that the
Dissident Nominees are well qualified to oversee the IMMU-132
development process with minimal disruption, given their
considerable experience in the pharmaceutical industry and with the
FDA regulatory process.”
- Specific to investor support for
venBio’s slate, leading proxy advisory firm Institutional
Shareholder Services (“ISS”) noted: “The lack of stock appreciation
in a year in which IMMU-132 achieved above expectations phase 2
clinical trial results, combined with a strong inflection point
after the dissident made its campaign public represent strong
evidence against management.”
- The Company’s second largest
stockholder,4 a highly respected healthcare investor, independently
publicly announced its support for venBio’s nominees.
- While Immunomedics has made numerous
statements since we launched our campaign claiming to prize
“shareholder value,” their actions reveal what we believe is their
true motivation: self-preservation and entrenchment at the expense
of stockholders’ interests.
- In reaction to our campaign, the
Company initially significantly delayed the Annual Meeting from
December 14, 2016 to February 16, 2017.
- The Company then hastily appointed self-selected new Board members – which
we believe mirrored the previous Board in terms of its lack of true
independence and absence of applicable experience.5
- As ISS noted: “First, the fact that the
board only moved to fix its governance problems after the dissident
started its campaign suggests a reactive
response, as opposed to a carefully considered refreshment.
Second, considering the long history of execution missteps and
conflicts of interest, Goldenberg and
Sullivan's leadership of this refreshment process appears to
undermine its sincerity.”6
- Immunomedics put together a last-ditch
effort to attempt to sway a proxy vote that favored venBio at the
time the Board made its decision7 – by signing away the Company’s
prized asset, IMMU-132, to Seattle Genetics (SGEN). We believe this was a rushed deal that does not deliver
fair value for stockholders.8
- In a separate announcement the same day
it announced the deal, the Company delayed the Annual Meeting
AGAIN, this time to March 3, 2017.
- Last week, Immunomedics once again
changed the rules in the middle of the game by amending its bylaws
to switch from a majority vote condition to a plurality vote for
the election of directors. The change in the voting standard to a
plurality now virtually guarantees that three incumbent Board
members will be elected, irrespective of how many stockholders vote
against their election. The Company misleadingly labeled this
complete change in election standard as a “clarif[ication],”
indicating the lengths the Board will go to in order to protect
their positions.
- Immunomedics has now resorted to the
desperate measure of suing its stockholders, and seeking to
disenfranchise these voters from having their voices heard.
- On February 17, 2017, the Company filed
a lawsuit that is factually and legally baseless. Based on record date information and 13F filings, we
believe at least 20% of Immunomedics’ stockholders are targeted in
this suit. We believe this is just the latest example of the
Company wasting stockholders’ money to serve the self-interest of
management and the existing Board.
- The lawsuit makes a number of false
claims about venBio (IMMU’s largest stockholder), IMMU’s second
largest stockholder and a highly respected healthcare investor, and
a long-standing and what appears to be extremely well-educated
contingent of retail investors – many of whom we believe have stood
by the Company for years when very few others would.
- Immunomedics’ stated objective is to
prevent the votes of these stockholders — and the votes of all
other stockholders who voted in favor of venBio’s slate — from
being counted at the upcoming Annual Meeting and is seeking a
declaration that those votes are null and void.
- Contrary to the Company’s initial
assertion on the heels of announcing the SGEN deal and even after
the delay in the date of the stockholder meeting, they are now also
seeking permission to set a new record date for the third
time.
- The fact that Immunomedics has come to
the point where they are aiming to use stockholder money to silence
venBio and to void stockholder proxies is deeply troubling –
though based on their pattern of behavior,
unfortunately not surprising.
- We are also
troubled by the Company’s recent announcement that it irrevocably
waived a closing condition for the SGEN transaction in what we
believe is an apparent attempt to handcuff a future Board, with the
effect of making it more likely that SGEN will bring a lawsuit
should a new Board be presented with a better
transaction.
- venBio is not backing down and will
continue to stand for the rights of all stockholders and the
election of a more qualified and truly independent Board.
- We strongly believe stockholders’ views
should be heard and respected, and the future of the company should
be determined by an elected Board, not an appointed Board.
- We believe the recently announced deal
with Seattle Genetics was put together hastily as a last-ditch
effort to attempt to sway a proxy vote that has favored venBio –
and it may not be the best option for all IMMU stockholders.
- This is why we believe that an elected
Board should have the chance to fully
evaluate the deal before it is consummated.
- As more details of the Seattle Genetics
agreement come to light, Wells Fargo analyst Jim Birchenough
recently critiqued the deal, noting: “We view the 15% royalty [for
licensing IMMU-132] as relatively low for a late stage oncology
asset, and while 20% royalty could be considered average, it is
unclear whether that rate of royalty could be reached within triple
negative breast cancer (TNBC) sales without further detail on sales
thresholds for royalty tiering.”9
- As a result, we recently took legal
action to protect stockholders’ ability to have their voice heard
before the Company is fully committed to the Seattle Genetics
partnership deal.
- We have successfully secured a
commitment from Immunomedics and SGEN to the Delaware Chancery
Court to not close the transaction prior to March 10, 2017,
following the 2016 Annual Meeting.
The choice that you face is clear: Endorse
a Board that has acted only reactively, continually acted in its
self-interest and that has not delivered value to stockholders, or
elect Board members that will be independent and experienced voices
that will be focused on achieving the most value for ALL
Immunomedics stockholders.
Vote FOR all four of venBio’s
highly-qualified nominees on the GOLD Proxy Card
today.
Sincerely,
Dr. Behzad Aghazadeh
IMPORTANT INFORMATION REGARDING THE VOTING
PROCESS
Tell your Board what you think! Your vote is important. No
matter how many shares of Common Stock you own, please give venBio
your proxy FOR the election of the venBio Nominees.
In a proxy contest, only the latest dated proxy card or
instruction form counts. Please note that a vote against the
Company’s nominees on the White card is not the same as a vote for
venBio’s nominees using the GOLD proxy card or voting instruction
form. To support venBio’s four nominees, you must vote the GOLD
proxy card or instruction form. If you have previously voted on
management’s White proxy card, a vote on the GOLD proxy card or
instruction form will count as long as it is your latest dated
vote.
If you have already voted any GOLD proxy card or instruction
form previously sent to you and have not accumulated additional
shares since that vote, your vote will automatically transfer to
the new GOLD proxy card or instruction form as of the January 24,
2017 record date and no additional action is required. If you have
accumulated additional shares, you will have to take action on the
new GOLD proxy card or instruction form in order to have your full
share position voted. To vote the “GOLD proxy card” please follow
the instructions on the voting instruction form sent to you and
vote electronically on www.proxyvote.com or by phone with the
number provided on the bottom of the GOLD form. In order to vote
electronically, you will need to locate your control number, which
will be the 16 digit number located inside a rectangular box on the
right hand side of the voting instruction form. Alternatively, you
can return the GOLD voting instruction form by mail in the postage
paid envelope provided to you.
If you have not received your GOLD proxy card or own less than
5,000 shares in any of your accounts, to vote these shares please
follow these steps:
1. Call your broker and request that your broker provide you
with the 16 digit control number for all of your accounts for the
venBio GOLD proxy card regarding the Immunomedics meeting
2. Once you have all of your control numbers go to
www.proxyvote.com type in the control number and vote the GOLD
proxy card
If you require additional assistance to vote your IMMU shares,
please call Okapi Partners at (855) 305-0857.
(212) 297-0720Stockholders Call Toll-Free at:
(855) 305-0857E-mail: info@okapipartners.com
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 Figure is aggregated using compensation disclosure figures
contained in summary compensation tables available in proxy
statements filed by the Company with the SEC starting in 1995. 2
See the Company’s proxy statement for the 2016 annual meeting of
stockholders, filed with the SEC on November 2, 2016, at 44. 3
Adam Feuerstein, Immunomedics Sale Hinges
on Proxy Battle Over Fate of Controversial Founder, TheStreet, Jan.
25, 2017, available at
https://www.thestreet.com/story/13965475/1/immunomedics-sale-hinges-on-proxy-battle-over-fate-of-controversial-founder.html.
4 With holdings of approximately 9.13% of the Company’s shares on a
fully-converted basis as of 12/31 based on the press release. 5
As further detailed in our stockholder
presentation dated January 26, 2017 and available at
https://www.sec.gov/Archives/edgar/data/722830/000090266417000431/p17-0247dfan14.htm.
6 Permission to quote from the ISS and Glass Lewis reports was
neither sought nor obtained. Emphases have been added by venBio. 7
As of the day before the SGEN Agreement was announced,
approximately 55% of the proxies submitted were in favor of the
election of all of venBio’s nominees. Such proxies are revocable
and stockholders can change their voting preferences until the time
of the annual meeting and results prior to the meeting may not be
the same or similar to the results at the annual meeting. 8 We
believe the$780 implied market capitalization based on the
Company’s announced deal terms is woefully small compared to other
independent oncology-focused companies that have leveraged their
respective crown jewels to achieve market capitalizations in the
billions. For example, it was roughly 7% of Tesaro, Inc.’s (Nasdaq:
TSRO) market capitalization, 10% of Exelixis, Inc.’s (Nasdaq:
EXEL), 25% of Clovis Oncology, Inc.’s (Nasdaq: CLVS), and 30% of
Array BioPharma Inc.’s (Nasdaq: ARRY) based on 2/10 share prices.
Each of these companies have late-stage or newly commercialized
compounds, similar to Immunomedics, though none have the same
breadth of utility, in our opinion, making the miniscule deal terms
even more galling. 9 Wells Fargo research dated February 17, 2017
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170222005852/en/
InvestorsOkapi Partners LLCBruce H. Goldfarb / Lydia
Mulyk, 212-297-0720Toll-free:
855-305-0857info@okapipartners.comorMediaSloane &
CompanyDan Zacchei / Joe Germani, 212-486-9500dzacchei@sloanepr.com
/ jgermani@sloanepr.com
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