Ziopharm Oncology, Inc. (Nasdaq: ZIOP) (“Ziopharm” or the
“Company”), today issued a response to a report issued by
Institutional Shareholder Services (“ISS”) in connection with the
consent solicitation initiated by WaterMill Asset Management Corp.,
Mr. Robert W. Postma and certain other individuals (collectively,
“WaterMill”). In its report, ISS recommends that Ziopharm
shareholders reject WaterMill’s attempt to remove half of the
Ziopharm Board of Directors (the “Board”) and to vote against the
addition of Mr. Postma to the Board. Ziopharm strongly recommends
shareholders sign and return the Company’s GREEN Consent Revocation
Card.
In a statement, the Company said:
“We are gratified that ISS acknowledges that
removing half of Ziopharm’s Board and replacing them with
WaterMill’s full slate of proposed candidates – including Mr.
Postma, himself – would not be in the best interest of shareholders
or the Company. In addition, we are pleased that ISS acknowledges
the track record of Ziopharm’s performance in recent years, which
we believe underscores the long-term value potential in Ziopharm
under the leadership of the current Board and management team.
Importantly, while we have a great deal of respect for ISS, the
report contains a number of factual mistakes. Additionally, key
information in the public domain relating to WaterMill nominee
Holger Weis raises questions regarding his suitability as a
director.”
The ISS report made clear several points
relating to Ziopharm’s financial standing and performance,
including by noting that “the company outperformed the median of
its peer group since Tarriff assumed leadership of the board and
since the company ended the Intrexon collaboration.”
However, Ziopharm’s management team and Board
believe it is critical for shareholders to be aware of the
following factual errors in the ISS report:
- ISS recommends in favor of fixing
the Board size at seven, but their other recommendations would
result in an eight-member board.
- ISS states that the Board
“rejected” the resignations of Elan Ezickson and Dr. Scott
Braunstein, but that is not correct. In fact, the Board never
rejected these resignations. The Board promptly engaged two leading
search firms to identify candidates in connection with the results
of the 2020 annual meeting and has accepted resignations as soon as
it has found suitable replacements.
- ISS reports Elan Ezickson attended
“fewer than 75 percent of meetings in 2019”, which is not accurate.
Mr. Ezickson attended nearly 90% of Board and committee meetings in
2019. Mr. Ezickson attended fewer than 75% of meetings the year
before that only because he was unable to participate in two
special Board meetings that were called on short notice.
- ISS’ review of Ziopharm’s material
weakness is incorrect. The ISS report notes “there is nothing that
prohibits the company from disclosing that remediation is
underway,” when in fact Ziopharm has disclosed the remediation
steps in several filings with the U.S. Securities and Exchange
Commission (the “SEC”), including in its most recent Form 10-Q
filed on November 5, 2020.
- ISS also critiques the Board for
the “retention of an overboarded director,” but fails to note that
the issue was remedied by the director’s resignation from another
board well in advance of the launch of the consent
solicitation.
Additionally, ISS recommends in favor of the
election of WaterMill nominee Holger Weis arguing, among other
things, that he “served on a public company board”. However, the
Company has not found any evidence that Mr. Weis has public company
board experience, an assessment supported in WaterMill’s own
disclosures. Moreover, shareholders should consider the following
publicly available information relating to WaterMill nominee Holger
Weis:1
- In July 2017, a majority of
shareholders executed written consents to remove Mr. Weis as
President, COO, and CFO of DemeRx, Inc. (“DemeRx”). Four days
later, Mr. Weis resigned from the company.
- Less than a year after Mr. Weis’s
departure, DemeRx filed for Chapter 11 bankruptcy. Importantly, in
response to Mr. Weis's creditor claim as part of the Chapter 11
bankruptcy filing, DemeRx claimed that Mr. Weis engaged in a breach
of his fiduciary duties, corporate waste, misrepresentations of
critical information to prospective shareholders about a clinical
trial and misreporting of an FDA submission. Among other things,
the DemeRx response notes the following:
“Weis made inaccurate and misleading
presentations to the Board indicating that he had achieved certain
performance benchmarks, when in fact he had not, resulting in the
payment of cash bonuses and other excessive
remuneration.”
“Weis engaged in corporate waste by
awarding himself stock, a golden parachute, cash payments, and
other excessive compensation based on milestones never achieved.
Weis wrote his own performance
evaluation. Weis painted a ‘rosy picture,’
overstated accomplishments and achievements and progress of
a financing plan. Weis made unauthorized payments to himself on his
last day of work, withdrawing all remaining funds from the
[DemeRX’s]
bank account. Weis also made certain to pay his future life
insurance on his way out the door.”
“The FDA put
[DemeRX’s]
research project on a ‘full clinical hold’ in 2014. A
potential investor,
Kieretsu Capital LLC
(‘Kieretsu’) was
interested in providing funding. Weis advised
Keiretsu that ‘Noribogaine is now
ready to enter phase 2 clinical testing.’
But DemeRx was not
‘ready’ because of the FDA’s full clinical hold imposed in 2014.
Weis also advised Keiretsu that DemeRx
had ‘addressed the FDA’s concerns,’ which was materially
inaccurate, as DemeRx had not
contacted the FDA since the time the hold was imposed in
2014.”
“During that
time Weis was in charge of
[DemeRx],
it is estimated that Weis caused corporate waste, damages, and harm
to
[DemeRx]
in the amount of approximately $10-12 million as the direct
result of their acts and omissions, including complete and utter
failure to implement adequate safeguards and controls and complete
lack of oversight, that caused
[DemeRx]
to engage in activities and other improvident conduct
beyond the scope of the PPM and that was otherwise fundamentally
flawed…”
“Weis also ran up costs to
DemeRx of over $868,000 in 2016 and
incurring over $556,000 in debt to patent attorneys in 2016
when DemeRx had
already received the ‘going concern’ opinion from
the outside independent auditors. Weis engaged in corporate
waste in regard to excessive
patent prosecution and foreign annuity costs, putting critical IP
at risk of abandonment due to lack of funds.”
1 Objection to Claim filed by DemeRx, Inc., Case
18-14149-RAM (Document 125), filed November 5, 2018.
Information related to the WaterMill consent
solicitation can be found at www.ZiopharmForward.com.
About Ziopharm Oncology,
Inc.Ziopharm is developing non-viral and cytokine-driven
cell and gene therapies that weaponize the body’s immune system to
treat the millions of people globally diagnosed with a solid tumor
each year. With its multiplatform approach, Ziopharm is at the
forefront of immuno-oncology with a goal to treat any type of solid
tumor. Ziopharm’s pipeline is built for commercially scalable, cost
effective T-cell receptor T-cell therapies based on its non-viral
Sleeping Beauty gene transfer platform, a precisely controlled
IL-12 gene therapy, and rapidly manufactured Sleeping
Beauty-enabled CD19-specific CAR-T program. The Company has
clinical and strategic partnerships with the National Cancer
Institute, The University of Texas MD Anderson Cancer Center and
others. For more information, please visit www.ziopharm.com.
Forward-Looking StatementsThis
press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended, including, but not limited to, statements regarding the
business strategy, plans and objectives of Ziopharm management and
expectations as to and beliefs about the Consent Solicitation
initiated by WaterMill. Forward-looking statements include all
statements that are not historical facts, and can be identified by
terms such as “anticipate,” “believe,” “contemplate,” “continue,”
“could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,”
“objective,” “ongoing,” “plan,” “potential,” “predict,” “project,”
“should,” “target,” “will,” or “would” or similar expressions and
the negatives of those terms. Any forward-looking statements are
based on management’s current expectations of future events and are
subject to a number of risks and uncertainties that could cause
actual results to differ materially and adversely from those set
forth in or implied by such forward-looking statements. Such risks
and uncertainties include, among others, the impact and results of
the Consent Solicitation and other shareholder activism activities
by WaterMill and/or other activist investors, the risks and
uncertainties disclosed in Ziopharm’s most recent Quarterly Report
on Form 10-Q for the quarter ended September 30, 2020 as well as
discussions of potential risks, uncertainties and other important
factors in any subsequent filings by Ziopharm with the SEC. All
information in this press release is as of the date hereof, and
Ziopharm undertakes no duty to update the information, except as
required by law.
Important Additional Information and
Where to Find ItZiopharm has filed a definitive consent
revocation statement (the “Consent Revocation Statement”) together
with a GREEN consent revocation card with the SEC
in connection with the Consent Solicitation. SHAREHOLDERS ARE URGED
TO READ THE CONSENT REVOCATION STATEMENT (INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT
ZIOPHARM FILES WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Shareholders will be able to obtain, free of charge, copies of the
Consent Revocation Statement (including the GREEN
consent revocation card), any amendments or supplements thereto and
any other documents that Ziopharm files with the SEC from the SEC’s
website (http://www.sec.gov) or from Ziopharm’s website
(www.ziopharm.com) by clicking on “Investors” and then “SEC
Filings.”
Investor Relations
Contacts:Adam D. Levy, PhD, MBAEVP, Investor Relations and
Corporate Communications(508) 552-9255alevy@ziopharm.com
Chris TaylorVP, Investor Relations and Corporate
Communications(617) 502-1881ctaylor@ziopharm.com
Michael VerrechiaMorrow Sodali(212)
300-2476m.verrechia@morrowsodali.com
Media Relations Contacts:Chris
Kittredge, Andrew Cole and Zachary TramontiSard Verbinnen &
Co.Ziopharm-SVC@sardverb.com
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