CHICAGO, July 13, 2017 /PRNewswire/ -- Ronin Trading,
LLC and SW Investment Management LLC (together with the other
participants in their solicitation, "Ronin"), collectively the
second largest stockholder of Peregrine Pharmaceuticals, Inc.
("Peregrine" or the "Company") (NASDAQ: PPHM), with aggregate
beneficial ownership of approximately 8.8% of the Company's
outstanding shares of common stock, today issued a letter to
Peregrine's stockholders. In the letter, Ronin announced that it
has formally nominated three independent, highly-qualified
candidates, Gregory P. Sargen,
Brian W. Scanlan and Saiid Zarrabian, for election to the Company's
Board of Directors (the "Board") at the Company's upcoming 2017
annual meeting of stockholders. As explained in the letter, Ronin
believes that there are opportunities to increase stockholder
value; however, Ronin is concerned that stockholders will continue
to suffer unless the Board is reconstituted with directors who will
represent stockholders' best interests. The full text of the letter
follows:
July 13, 2017
Dear Fellow Peregrine Stockholders:
Ronin Trading, LLC and SW Investment Management LLC (together,
"we") collectively beneficially own approximately 8.8% of the
outstanding shares of Peregrine Pharmaceuticals, Inc. ("Peregrine"
or the "Company"), making us the Company's second largest
stockholder.1
As we have discussed on several occasions with the Company's
management, we are extremely concerned by Peregrine's current
strategy, the continuous dilution of stockholders and the Company's
exceptionally weak corporate governance. Both publicly and in our
private conversations with management, we were shocked that neither
Steven W. King nor Paul J. Lytle, Peregrine's Chief Executive
Officer and Chief Financial Officer, respectively, could articulate
any long-term strategy for addressing the capital needs of the
Company, curing the outstanding going concern notice or rectifying
the Company's corporate governance shortcomings, including the
apparent interest misalignment of directors and other problems
associated with Peregrine's Board of Directors (the "Board").
Now, well over a year after another clinical failure of
bavituximab (the Company's immunotherapy drug candidate), instead
of addressing the core problems of the Company, the Board relies on
tangential, counterfactual, and straw-man arguments to justify
their positions, in desperate attempts to externalize the problems
they have created. We believe immediate changes are necessary to
stop Peregrine's reckless spending and equity dilution in order to
put the Company on the path towards creating value for stockholders
and stability for employees.
It is important you understand that, unlike the current Board,
our interests are aligned with yours. Like you, we will only be
able to achieve a return on our investment upon the appreciation in
value of Peregrine's stock and we will lose our money if the
Company continues to perform poorly. We have histories of
successful investments in biotech and pharmaceutical contract
development and manufacturing firms, and we believe it is obvious
that the only path towards creating value for all stockholders
begins with electing a new group of highly qualified independent
directors and a sensible change of strategy. We would like to take
this opportunity to explain the strategic changes that we believe
are necessary to increase stockholder value and detail why we
believe ALL stakeholders – stockholders, employees and customers –
would benefit from the election of our independent, highly
qualified director candidates at the upcoming 2017 Annual
Meeting.
Suspend All Clinical Development
Activities
All clinical development activities should be immediately halted
and the Company's cost structure must be adjusted accordingly. In
the last decade, we estimate that Peregrine has spent over
$300 million cumulatively in research
and development on clinical development activities, which are
almost entirely related to bavituximab, a drug which has been
unsuccessful in numerous clinical studies, most recently failing a
Phase III SUNRISE trial in February
2016 for small cell lung cancer. It has shown similarly
disappointing results for breast cancer, hepatitis C, and
pancreatic cancer. Given bavituximab's poor performance in clinical
trials, it is questionable whether any further spending on its
development is warranted at all; however, given Peregrine's
financial condition and the emergence of its contract development
and manufacturing business, Avid Bioservices ("Avid"), squandering
additional capital on further studies is objectively indefensible.
The profligate spending on risky clinical development has caused
Peregrine to continually resort to myopic and harmful financing
solutions which have caused staggering stockholder dilution
amounting to an astonishing 30% annually since fiscal year ("FY")
2010. In its most recent Form 8-K filing on July 7, 2017, the Company revealed that the
number of outstanding shares had risen to 315 million (now
split-adjusted to 45 million shares), bringing the total dilution
in FY 2017 alone (plus the subsequent period from April 30, 2017 through July 7, 2017) to an outrageous 45.6%. That
management publicly laments its stock price and claims a focus on
creating value for all stockholders while simultaneously diluting
stockholders at such an extraordinary (and accelerating) rate shows
a profound misunderstanding of governance, management and
stockholder value.
This chart should make investors shake their heads in utter
disbelief – THE DILUTION NEEDS TO STOP! Peregrine must immediately
cease all clinical development activities, adjust its cost
structure accordingly, and begin a process to monetize its
intellectual property, either through an outright sale or a
contingent value right to a larger pharmaceutical firm that has the
financial ability to underwrite further studies. Peregrine's losses
are entirely attributed to its roughly $30
million in annual clinical development activities. By
stopping clinical development activities and monetizing the
intellectual property, many of Peregrine's problems will
automatically be solved, as it will no longer be deeply
unprofitable or need to constantly dilute stockholders at such a
rapid rate. Furthermore, this will enable Peregrine to focus on
profitably growing Avid, which will no longer have to internally
compete for capital with the extremely risky clinical development
spending.
Refocus on Contract Development and
Manufacturing
Avid is an extremely attractive business in a secularly growing
market. Because of the growing demand for biologic and biosimilar
drugs, we are very optimistic about the outlook for biologics
contract manufacturers, particularly smaller ones like Avid that
have embraced single-use bioreactor technology. Avid's excellent
regulatory track record and premier customer list are validation of
the quality of the business and its prospects for long-term growth
with high returns on capital. However, Avid has entirely different
capital requirements, cash flow profiles, regulatory demands,
scientific expertise and managerial needs than Peregrine's
high-risk clinical development. It is illogical for Avid to be
owned alongside Peregrine's high risk clinical development
activities. No other public contract manufacturer has a large
clinical development operation, let alone one that renders the
whole company massively unprofitable.
Management has stated that only 10% of Peregrine's employees are
directly related to its clinical development
operations.2 Unfortunately for the other 90% of
employees who work at Avid, the price of Peregrine's stock is
almost entirely driven by clinical development activities and the
massive losses and dilution it causes. We were shocked that
management was totally unappreciative of how misaligned the Company
is with 90% of its own employees.
We agree with management's public comments about Avid being an
excellent business whose value is not accurately reflected in
Peregrine's stock price, but how can any investor confidently value
the price of the stock when the dilution is both severe and
perpetual? No one knows what share count to use. This is such an
obvious problem, but again, we were shocked that in private
conversations with management, they could not comprehend how the
endless dilution has contributed to Peregrine's poor stock
performance under their watch. It is clear to us that Avid is a
great business and it should be a standalone company with the right
people and incentives in place in order to continue its growth for
the long-run.
Poor Corporate Governance Is to Blame –
Changes Must Be Made
In our opinion, underpinning Peregrine's extreme losses,
dilution, and stockholder value destruction are Peregrine's three
independent directors, Eric S.
Swartz, Carlton M. Johnson
and David H. Pohl, who we believe
are primarily responsible for Peregrine's problems. With
little-to-no interest alignment with stockholders, no experience
with contract manufacturing, track records of enormous stockholder
losses and questionable public company dealings outside of
Peregrine, we do not believe it is appropriate for these
individuals to continue serving as directors of Peregrine. We
believe that radical changes to Peregrine's Board are urgently
needed to ensure that stockholders' best interests are
appropriately represented in the boardroom.
Severe Interest Misalignment with
Stockholders
Messrs. Swartz and Johnson have each served as directors since
1999, while Mr. Pohl has served as a director since 2004. Despite
their unusually long tenures, these three independent directors
collectively outright own less than 0.22% of the shares
outstanding. Although these directors have been granted hundreds of
thousands of stock options, most of these options are deep
out-of-the-money, meaning they don't have much of a vested
financial interest in the Company. More telling as to just how
little skin in the game these directors have is that no independent
director has personally made an open market purchase of Peregrine
shares in over nine years,3 and Mr. Pohl has not
purchased a single Peregrine share in his nearly 13 years on the
Board, and owns just 286 shares outright.
Director
|
Shares
Owned
|
%
Outstanding
|
Options
Awarded
|
Last Open
Market
Purchase
|
Eric S.
Swartz
|
96,017
|
0.213%
|
274,215
|
2008
|
David H.
Pohl
|
286
|
0.001%
|
274,215
|
Never
|
Carlton M.
Johnson
|
1,095
|
0.002%
|
274,215
|
2007
|
Source: SEC filings;
adjusted for reverse split.
|
|
|
|
Despite Peregrine's abysmal stock price performance during their
tenure, the continuous dilution of stockholders and repeated
clinical failures, these three directors have collectively earned
over $10 million in total
compensation since the start of FY 2010, and that is not even
counting whatever they have received after April 30,
2016!4
Director
|
Average 5 Year
Compensation
|
Last Fiscal
Year
Compensation
|
|
|
Eric S.
Swartz
|
$512,099
|
$518,038
|
|
David H.
Pohl
|
$499,699
|
$488,038
|
|
Carlton M.
Johnson
|
$560,099
|
$548,038
|
|
Source: SEC
filings.
|
|
|
|
The average director compensation for LARGE pharmaceutical firms
Pfizer Inc., Merck & Co., Inc., Johnson & Johnson, Eli
Lilly and Company and AbbVie Inc. is approximately $301,000 per year, with only one of such
company's average director compensation being higher than
$300,000.5 As disclosed in
Peregrine's proxy statement for the 2016 Annual Meeting, the
Company's independent directors each received an average of over
$518,000 in total compensation, over
72% higher than the average compensation received by directors of
the aforementioned highly successful large-cap pharmaceutical
companies.
With immaterial stock ownership and unjustifiably high
compensation, there is effectively no interest alignment between
the Board and Peregrine's stockholders. We have little doubt that
this interest misalignment has played a key role in the relentless
dilution which has led to the destruction of stockholder value.
The interest misalignment also appears to extend to Peregrine's
management team. Steven W. King
(CEO) and Paul J. Lytle (CFO) have
each been at the Company for 20 years. Despite their long tenure,
combined they own outright less than 0.14% of the Company.
Peregrine's five named executive officers ("NEO's") own outright a
combined 93,467 shares of the Company, a mere 0.21%
stake!6 While the NEO's have been granted over 1 million
options,7 only a fraction of those options are
in-the-money, leaving them with a minimal vested financial
interest.
Most recently, on April 28, 2017,
Messrs. King and Lytle and Joseph S.
Shan (Vice President) each filed Form 4's indicating
purchases of 19,941 shares, 37,389 shares and 39,177 shares,
respectively.8 Even though these shares were purchased
on April 28th, a day on
which Peregrine's stock closed at $0.6156 per share, these insiders purchased their
shares for $0.2712 per share, giving
them an instant gain of over 125%. How was this possible?
Messrs. King, Lytle and Shan purchased their shares through
Peregrine's Employee Stock Purchase Plan, which gives certain
insiders a six month look-back window (the two windows ending
October 31st and
April 30th) to purchase
stock at 85% of the fair market value on either the first or last
day of the window. With April
28th being the final trading day of the window,
insiders were allowed to purchase stock at 85% of the price of
Peregrine's shares on either April 28,
2017 or November 1, 2016.
Accordingly, despite the price of Peregrine's stock rising
materially from its close of $0.319
per share on November 1, 2016,
Peregrine insiders were able to purchase stock from the
Company on April 28, 2017 at 85%
of the price of Peregrine shares six months ago (i.e. $0.2712 per share).
Peregrine's Employee Stock Purchase Plan, which allows
management to profit at the direct expense of stockholders, is yet
another example of the misalignment of interests and the cultural
leadership plague that has harmed Peregrine's stockholders.
Management being allowed to profit directly at stockholders'
expense is insulting. We believe these purchases are unfair,
dilutive and fail to properly incentivize management.
Independent Directors Lack Relevant
Experience
It appears that not one of the three independent directors
possess ANY experience, no matter how tangential, in either
contract manufacturing or biotechnology.
Mr. Pohl is a semi-retired attorney who serves as Of Counsel for
Herold & Sager, a small law firm based in California. Although his area of practice for
Herold & Sager is not described, his bio for Peregrine notes
that he previously worked as general counsel for large financial
services companies. He has served as a director on one other public
board – a company without any revenues in its history that has
unsuccessfully attempted to license semiconductor technology. Mr.
Pohl does not appear to have any experience whatsoever with
biotechnology or contract manufacturing.
Mr. Swartz is a financier who was most recently registered as a
broker for NMS Capital Advisors LLC for one year, ending in 2016,
according to FINRA records. We were unable to find any recent
activity with the various investment entities that he owns and
manages (as described further in the section below). Mr. Swartz
does not appear to have any experience of any kind with
biotechnology or contract manufacturing, nor does he have any
public board experience outside of Peregrine.
Mr. Johnson is a self-employed attorney, although he is also
described as having been a stockholder of the law firm of
Smith, Sauer, DeMaria, Johnson out of
Florida. Although various websites
describe this firm's specialty as "elder care," oddly, no website
exists for the firm. None of Mr. Johnson's biographical information
suggests any background in biotechnology or contract manufacturing.
He has served on three other public company boards, none of which
relate to biotechnology or contract manufacturing.
Despite their apparent lack of relevant experience, these
directors somehow annually make hundreds of thousands of dollars
more for their service on Peregrine's Board than their counterparts
who serve as directors of the hundred-billion dollar pharmaceutical
firms noted above.
Independent Directors Have Records of Value
Destruction and Questionable Dealings
In addition to the severe interest misalignment with
stockholders and absence of relevant experience to Peregrine's
businesses, the involvement with public companies that Messrs.
Johnson, Pohl and Swartz do have is characterized by shockingly
consistent failure and stockholder value destruction that should
deeply concern all Peregrine stockholders.
Mr. Pohl currently serves on the advisory board of Max Sound
Corp. ("Max Sound"), a $2.0
million market cap company with a stock price of roughly
$0.002 per share and no revenue in
the company's history.9 Mr. Pohl joined Max Sound's
advisory board in August 2014 with a
grandiose press release describing him as a "famed attorney"
joining Max Sound's self-proclaimed "prestigious" advisory board.
Mr. Pohl joined the advisory board despite possessing no
identifiable background in the type of audio "disruptive
technology" that Max Sound claims to own (and has unsuccessfully
tried to sue companies like Google for royalties). Shares of Max
Sound have lost nearly 99% of their value since Mr. Pohl joined the
company.
Mr. Pohl's only other public company experience was serving as a
director of Patriot Scientific Corp. ("Patriot Scientific"), a
$5.6 million market cap company with
a stock price of roughly $0.014 per
share,10 from 2001-2008, while also serving as its CEO
from 2005-2007. Patriot Scientific (where Mr. Johnson has also
served as a director since 2001), like Max Sound, is a failed
intellectual property company that has not generated any material
revenue in the life of the company and has had zero revenues since
2010. Since 2001, Patriot Scientific's stock has lost roughly 94%
of its value.
Mr. Swartz is the founder, principal and/or manager of several
financial firms including Roswell Capital Partners, LLC, Equiplace
Securities, LLC, Swartz Investments, LLC, BridgePointe Master Fund
Ltd. and Centurion Private Equity, LLC (collectively, the "Roswell
entities"). These are a mix of related finance and investment
vehicles managed by Mr. Swartz, and they have been involved with
raising capital for questionable pink sheet stocks since the
mid-1990s.
According to his Peregrine biography, Mr. Johnson worked for Mr.
Swartz since at least 1996, acting as in-house legal counsel for
Roswell Capital affiliated entities until becoming "self-employed"
in 2013. Mr. Johnson has also served as a director of Patriot
Scientific since August 2001 (where
Mr. Pohl previously served as a director and CEO as noted above),
during which time its fully diluted share count has increased by
roughly 650% while its stock has lost approximately 94% of its
value. Mr. Johnson previously served as a director of Cryoport,
Inc. from 2009-2012,11 during which time the stock lost
84% of its value while the fully diluted share count increased by
over 800%. He also previously served as a director of ECOtality,
Inc. from 2009-2011,12 during which time the stock
lost 90% of its value while the fully diluted share count increased
by over 500%, with the company later filing for bankruptcy in
2013.
Unfortunately, Messrs. Swartz's and Johnson's track record with
failed and highly questionable companies at the Roswell entities is
so long that for the sake of brevity we are limited to providing a
partial list of the penny stock companies and a very brief
description of the relevant outcomes for stockholders. According to
public records, below is a limited list of public companies which
Messrs. Swartz and Johnson have provided (or attempted to provide)
financing to and have generally been involved with.
|
Date of
Announcement
|
Split-Adjusted
Stock Price at
Time of First
Involvement
|
Announced Capital
Investment
|
Stock Performance
(Rounded)
|
|
|
Note
|
Company
|
Alternate Energy
Holdings
|
November
2010
|
$0.690
|
$150
million
|
-100%
|
Bankrupt; CEO and CFO
convicted of fraud
|
MabCure
|
January
2011
|
$0.430
|
$10
million
|
-100%
|
Trades for $0.003 per
share
|
Medisafe 1
Technologies
|
February
2011
|
$0.170
|
$5 million
|
-100%
|
Delisted
|
Diadem
Resources
|
March 2011
|
$0.090
|
$8 million
|
-100%
|
Delisted
|
Minerco Resources
Inc
|
December
2010
|
$0.009
|
$5 million
|
-100%
|
Trades for $0.0022
per share
|
Clean Power
Concepts
|
April 2011
|
$0.110
|
$7.2
million
|
-100%
|
Trades for $0.0001
per share
|
Amarantus BioSciences
Inc
|
October
2011
|
$0.161
|
$30
million
|
-100%
|
Trades for $0.05 per
share
|
Green EnviroTech
Holdings
|
March 2011
|
$0.640
|
$10
million
|
-100%
|
Trades for $0.05 per
share
|
DC Brands
International
|
February
2011
|
$0.075
|
$5 million
|
-100%
|
Delisted
|
Prominex Resource
Corp
|
February
2011
|
$0.060
|
$20
million
|
-100%
|
Delisted
|
Conway
Resources
|
March 2011
|
$0.080
|
5 million
CAD
|
-100%
|
Delisted
|
WinSonic Digital
Media
|
August
2010
|
$0.040
|
$10
million
|
-100%
|
Delisted
|
ICP Solar
Technologies
|
June 2008
|
$0.670
|
$5 million
|
-100%
|
Delisted
|
Gopher
Protocall
|
June 2011
|
$0.120
|
$10
million
|
-100%
|
Delisted
|
LI3 Energy
Inc
|
December
2010
|
$0.230
|
$10
million
|
-91%
|
$10 million market
cap
|
Novation Holdings
Inc
|
August
2011
|
$0.570
|
$30
million
|
-100%
|
Trades for $0.0001
per share
|
Source: SEC filings;
press releases.
|
|
|
While the value destruction speaks for itself, even more
troubling is that many of these companies appear to follow a
disturbing pattern: pink sheet stocks trading for pennies, no
history of revenues or business activities, large reverse-splits,
frequent changes to the company's name, a flurry of highly
promotional press releases and paid promotional campaigns and
stocks which collapsed in a short amount of time after raising
capital, eventually being delisted. We have been hard-pressed to
find a single stock which the Roswell entities raised capital for
that did not resemble one of these extremely troubling fact
patterns.
Typically, the Roswell entities provided "equity funding
facilities" that allowed highly questionable companies to issue
soon-to-be-worthless stock to the general public. Importantly, the
Roswell entities were merely acting as a conduit to raise money for
such companies, and were not actually investing capital into them.
In fact, most of these equity funding facilities permitted the
Roswell entities to short the stocks before purchasing discounted
shares from the company, effectively allowing the Roswell entities
to lock in a profit at the expense of the public without making any
investment in the companies. There is no shortage of other
unsettling public company dealings from the Roswell entities, which
we can detail in future communications.
We believe it is EXTREMELY inappropriate to allow people who
appear to be consistently associated with stockholder value
destruction to be entrusted as fiduciaries in ANY capacity at ANY
public company. The stockholders of Peregrine deserve a Board
comprised of highly-qualified independent directors with relevant
industry experience and track records of creating stockholder
value. Instead, the current Board consists of individuals with
track records of value destruction and questionable dealings that
cast immense doubt on their ability to act in stockholders' best
interests.
ISS Has Previously Recommended WITHHOLD Votes
Against ALL Independent Directors
Based on the results from last year's annual meeting, where
every independent director received at least 30% WITHHOLD votes
with respect to their re-election, it is clear that we are not the
only ones who are extremely displeased with the composition of the
Board and ready for immediate change. In addition, leading
independent proxy advisory firm Institutional Shareholder Services
(ISS) recommended a WITHHOLD vote with respect to each of
Peregrine's directors, stating:
"WITHHOLD votes are warranted
for compensation committee members Carlton
M. Johnson Jr., David H.
Pohl, and Eric S. Swartz due
to continued problematic pay practices and the board's failure to
adequately respond to shareholder concerns."
In fact, ISS has recommended WITHHOLD votes against ALL
independent directors at each of the past THREE annual meetings.
While change is desperately needed at Peregrine, the incumbents
appear committed to a pattern of entrenchment. In fact, we are
concerned that the Company may have deliberately taken action to
frustrate our nomination of director candidates, including by
closing its transfer books for an extended period of time.
The status quo, as evidenced by the outrageous equity dilution
and abysmal corporate governance practices, has proven untenable,
which is why we have formally nominated three independent,
highly-qualified candidates, Gregory P.
Sargen, Brian W. Scanlan and
Saiid Zarrabian, for election at the
upcoming 2017 Annual Meeting. In the 16 months since bavituximab's
failure of its Phase III SUNRISE trial, the Board has failed to
address the Company's problems, and instead, stockholders continue
to be diluted at a preposterous rate. We believe the individuals we
have nominated possess the financial, operational and strategic
acumen the Board urgently needs to enhance stockholder value.
Our Director Nominees: Qualified, Successful,
Independent
Gregory P. Sargen ("Greg")
is the former Chief Financial Officer and currently the Executive
Vice President of Corporate Development of Cambrex Corp.
("Cambrex"), a $1.9 billion market
capitalization contract manufacturing organization headquartered in
Rutherford, New Jersey. In 2017,
Cambrex received 24 awards at the CMO Leadership Awards, for
capabilities compatibility, development, expertise, quality, and
reliability. During the period of Greg's role as CFO (February 2002 – January
2017), Cambrex's stock price increased approximately 400%, a
17.7% annualized return for stockholders over a 15-year period. As
CFO, Greg played a key role in overseeing Cambrex's revenue growth
of over 100% and its earnings per share growth of over 650%. Greg
has a track record of executive leadership, strong stockholder
returns, and excellent experience within the advanced
pharmaceutical ingredients (API) contract manufacturing industry.
Greg received a bachelor's degree from Penn
State University and an MBA from the Wharton School of the
University of Pennsylvania.
Brian W. Scanlan ("Brian")
is Managing Partner of Freedom Bioscience Partners, LLC, a
pharmaceutical services business advisory firm providing direct,
dedicated senior leadership support, strategic direction and
industry expertise. Brian also currently serves as a director of
Callery, LLC, a spin-off of BASF
that is a global leader in highly reactive chemistries. From
March 2011 to October 2013, Brian served as President and Chief
Executive Officer of Cambridge Major Laboratories, Inc. ("CML")
(n/k/a Alcami Corporation), a leading global chemistry outsourcing
provider of integrated drug development and manufacturing services
to the pharmaceutical and biotechnology industries. Brian initially
joined CML in 2002 and held various leadership positions prior to
becoming President and Chief Executive Officer, including Chief
Business Officer, Vice President – Corporate Development, Vice
President – Business Development and Director – Sales &
Marketing. He also served on the Board of Directors of CML from
2007 to June 2014. Prior to joining
CML, Brian served as Manager of Business Development at Rhodia
ChiRex Inc., a multinational technology and custom pharmaceutical
development and manufacturing firm, from 2000 to 2002. From 1998 to
2000, Brian served as Manager of Sales & Marketing at Universal
Pharma Technologies, LLC, a premiere innovator, developer and
supplier of pharmaceutical manufacturing equipment and technologies
focused on accelerating drug development. Brian began his career in
1991 as a Research Chemist at UOP LLC (n/k/a Honeywell UOP), the
leading international supplier and technology licensor for the
petroleum refining, gas processing, petrochemical production and
major manufacturing industries, after which he led marketing
efforts for UOP's Specialty Chemicals Group from 1995 to 1998.
Brian earned his MBA from the Illinois
Institute of Technology and a B.S. in Chemistry from
Northern Illinois University.
Saiid Zarrabian ("Saiid")
has nearly 40 years of board and executive/operational experience
in multiple industries, including 23 years experience in the
biotech, pharmaceutical & instrumentation industries. He
currently serves as an advisor to Redline Capital Partners, S.A., a
Luxembourg based biotechnology and
pharmaceuticals focused investment firm. Saiid has been involved in
multiple turnaround situations, including most recently as Chairman
of the Board of La Jolla Pharmaceutical Company during the
company's transition from an OTC-traded penny stock company to a
NASDAQ-listed company with a successful phase three drug. He
previously served as CEO, President and a director of Cyntellect,
Inc. (2010 – 2012), a stem cell processing and visualization
instrumentation company, where he led the company's annual revenue
growth from $800,000 to $11 million,
culminating in a sale of the company in 2012. Some of Saiid's
notable engagements include serving as a consultant/acting COO for
SciTegic, Inc. (2002 – 2004), an informatics company with 10X
revenue growth culminating in a sale of the company at >35X
invested capital within 2.5 years of his engagement; a director of
eMolecules, Inc. (2009-2011), a chemistry eCommerce portal whose
revenues grew from less than $500,000
to over $20 million; and a director
of Penwest Pharmaceuticals Co. (2010), where he was a director
nominee of an activist investor and the company was sold at ~3x its
share price in less than 1 year. Saiid's professional experience
also includes serving as an executive of Intrexon Corporation,
Senomyx, Inc., Pharmacopeia, Inc., Molecular Simulations, Inc.,
Symbolics, Inc. and Computervision Corporation. Additional
directorships he has held in the industry include Immune
Therapeutics, Inc., Exemplar Pharma, LLC and Ambit Biosciences
Corporation.
We strongly believe that the Company's stockholders will benefit
from the addition of Messrs. Sargen, Scanlan and Zarrabian to the
Board and we look forward to providing stockholders with an
alternative to the status quo at the upcoming 2017 Annual
Meeting.
Regards,
John S. Stafford III
RONIN TRADING, LLC
Stephen White
SW INVESTMENT MANAGEMENT LLC
CERTAIN INFORMATION CONCERNING THE
PARTICIPANTS
Ronin Trading, LLC, together with the other participants named
herein (collectively, "Ronin"), intends to file a preliminary proxy
statement and an accompanying proxy card with the Securities and
Exchange Commission ("SEC") to be used to solicit votes for the
election of its slate of three highly qualified director nominees
at the 2017 annual meeting of stockholders Peregrine
Pharmaceuticals, Inc., a Delaware
corporation (the "Company").
RONIN STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ
THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH
PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB
SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS
PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT
WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST.
The participants in the solicitation are Ronin Trading, LLC
("Ronin Trading"), John S. Stafford,
III, SWIM Partners LP ("SWIM Partners"), SW Investment
Management LLC ("SW Management"), Stephen
White, Gregory P. Sargen,
Brian W. Scanlan and Saiid Zarrabian.
As of the date hereof, Ronin Trading directly beneficially owned
3,310,651 shares of the Company's common stock, $0.001 par value per share ("Common Stock"),
including 137,260 shares of Common Stock that may be acquired upon
the conversion of 115,299 shares of the Company's 10.50% Series E
Convertible Preferred Stock, $0.001
par value per share ("Series E Preferred Stock"). Mr. Stafford, as
the Manager of Ronin Trading, may be deemed to beneficially own the
3,310,651 shares of Common Stock beneficially owned directly by
Ronin Trading. As of the date hereof, SWIM Partners directly
beneficially owned 469,308 shares of Common Stock, including 10,333
shares of Common Stock that may be acquired upon the conversion of
8,680 shares of Series E Preferred Stock. As of the date hereof, an
account separately managed by SW Management (the "SW Account") held
172,487 shares of Common Stock, including 3,714 shares of Common
Stock that may be acquired upon the conversion of 3,120 shares of
Series E Preferred Stock. SW Management, as the general partner and
investment adviser of SWIM Partners and the investment adviser of
the SW Account, may be deemed to beneficially own the 641,795
shares of Common Stock beneficially owned in the aggregate by SWIM
Partners and held in the SW Account. Mr. White, as the Manager of
SW Management, may be deemed to beneficially own the 641,795 shares
of Common Stock beneficially owned in the aggregate by SWIM
Partners and held in the SW Account. As of the date hereof, Messrs.
Sargen, Scanlan and Zarrabian did not beneficially own any
securities of the Company.
Investor Contact:
Stephen White
SW Investment Management LLC
(312) 765-7033
1 Source: Peregrine's Form 8-K filed on July 7, 2017, disclosing approximately 45 million
shares outstanding (315 million pre-split).
2 Source: Conversation with Steven W. King and Paul
J. Lytle.
3 Excludes indirect purchases made by Highlight Fund,
LLC reported on Form 4 filings by Eric S.
Swartz given no relationship is explained.
4 Source: Peregrine's SEC filings.
5 Source: SEC filings from Pfizer Inc., Merck &
Co., Inc., Johnson & Johnson, Eli Lilly and Company and AbbVie
Inc.
6 Source: Peregrine's SEC filings and Form 4 filings
made by the NEOs. 93,467 figure is adjusted for reverse split and
even includes 1,071 shares that could be acquired upon conversion
of Series E Preferred Stock owned by NEO Mark R. Ziebell.
7 Source: Peregrine's SEC filings and Form 4 filings
made by the NEOs. Adjusted for reverse split.
8 Number of shares and purchase prices not adjusted
to reflect 1-for-7 reverse stock split that became effective on
July 7, 2017 in discussion regarding
Employee Stock Purchase Plan.
9 Max Sound share price and market cap as of
July 12, 2017.
10 Patriot Scientific share price and market cap as
of July 12, 2017.
11 Served as a director of Cryoport, Inc. from
May 4, 2009 to March 1, 2012. Source: SEC filings; Bloomberg
12 Served as a director of ECOtality, Inc. from
October 30, 2009 to December 15, 2011. Source: SEC filings;
Bloomberg
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SOURCE Ronin Trading, LLC and SW Investment Management LLC