CPEX Pharmaceuticals, Inc. (NASDAQ: CPEX) today urged
stockholders to consider all the facts when voting on the approval
of the FCB I Holdings Inc. transaction, which will deliver
stockholders $27.25 per share in cash if approved, and not to be
misled by Mangrove Partners’ flawed analysis and illusory proposal.
The FCB transaction delivers immediate and certain maximum
after-tax value to stockholders. CPEX strongly recommends
stockholders review the facts outlined below and vote today FOR the
FCB transaction proposal.
MANGROVE’S ANALYSIS IGNORES THE
REALITYOF CPEX’S BUSINESS AND ITS FUTURE RISKS
Mangrove’s analysis isn’t based in reality. Substantially all of
CPEX’s revenues are generated from Testim® royalties and are at
risk due to competition and litigation.
Mangrove incorrectly assumes Testim® royalties will continue at
historical levels and fails to account for increasing competition.
As a point in fact, licensee Auxilium recently announced its 2011
revenue growth projections for Testim® are only expected to be
approximately 4%-9%, a significant change from the approximately
17% growth assumed by CPEX in its projections that were included in
CPEX’s proxy statement. Independent analysts have also recently
revised their Testim® projections downward but Mangrove has
apparently chosen to ignore them or remain ignorant. To cite just
one of the many examples:
- “…we already model a significant
slowing of sales growth through 2015 and a sharp erosion in sales
in 2016 with the introduction of an Androgel generic...” –Jefferies
& Company (February 11, 2011)
In addition, Mangrove does not acknowledge the considerable
litigation risk. As detailed in their public filings, CPEX and
Auxilium are engaged in a pending patent infringement lawsuit
against Upsher-Smith Laboratories, Inc. regarding a generic version
of Testim®. An adverse outcome in the litigation could result in
one or more generic versions of Testim® being launched in the U.S.
before the expiration of the Testim® patent in January 2025.
ISS ECHOES SIGNIFICANT RISKS OF MANGROVE
PROPOSAL
In commenting on Mangrove’s opinion that CPEX should restructure
the Company on a standalone basis, ISS – a leading independent firm
that advises institutional investors on how to vote on such
proposals – stated in its report that: “… the all-cash
consideration [of the FCB transaction] gives shareholder certainty
of value, which may not be realized if shareholders opt instead for
a recapitalization and standalone strategy, given the execution,
tax, litigation, and competitive risks associated with any
standalone strategy.”
MANGROVE’S ILLUSORY PROPOSAL IS BASED ON BAD
MATHAND IS STILL NOT FINANCED
Mangrove’s math just doesn’t add up. The CPEX Board
believes the Mangrove proposal would not generate sufficient cash
to pay the $28.00 special dividend because it severely
underestimates the cash CPEX would need for costs such as the
appropriate cash reserves for operating the business, transaction
fees and expenses, financing fees, Mangrove’s own proposed interest
reserve requirements and the merger agreement termination fee. When
properly considered, the special dividend would be approximately
$2.30 per share less than suggested in
Mangrove’s proposal. Therefore, at best, stockholders might see a
$25.70 dividend, and that’s only if Mangrove is able to hold onto
their supposed financing sources, who keep disappearing.
Mangrove’s financing is still not committed and is highly
conditional. Despite Mangrove’s claims that its financing is in
place, there are no commitment letters from its supposed financing
sources. In fact, Mangrove has inexplicably lost two of the
original seven financing sources related to its proposal.
Mangrove – which has neglected to inform stockholders that it
expressed an interest in acquiring CPEX on December 15, 2010 at a
discount to the Company’s then-current market price of $24.05 per
share – is trying to destroy this value-creating merger transaction
for its own benefit. Do not miss this opportunity to receive
maximum cash value for your CPEX shares.
VOTE TODAY FOR THE $27.25 PER SHARE ALL CASH
PREMIUM TRANSACTION
The CPEX special meeting of stockholders will be held on March
24, 2011, but stockholders can vote today by following the
instructions on their proxy card to submit their proxy via the
Internet or by telephone. If they have Internet access, CPEX
encourages stockholders to record their vote via the Internet. If
stockholders have any questions or need assistance voting their
shares, please contact MacKenzie Partners, Inc., CPEX’s proxy
solicitor, at (800) 322-2885 or (212) 929-5500 (call collect) or at
cpex@mackenziepartners.com.
Permission to use quoted material was neither sought nor
obtained.
About CPEX Pharmaceuticals, Inc.
CPEX Pharmaceuticals, Inc. is an emerging specialty
pharmaceutical company focused on the development, licensing and
commercialization of pharmaceutical products utilizing CPEX’s
validated drug delivery platform technology. CPEX has U.S. and
international patents and other proprietary rights to technology
that facilitates the absorption of drugs. CPEX has licensed
applications of its proprietary CPE-215® drug delivery technology
to Auxilium Pharmaceuticals, Inc. which launched Testim, a topical
testosterone gel, in 2003. CPEX maintains its headquarters in
Exeter, NH. For more information about CPEX, please visit
www.cpexpharm.com.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
CPEX has filed with the Securities and Exchange Commission (the
“SEC”) and furnished to its stockholders a definitive proxy
statement in connection with the proposed transaction with FCB (the
“Definitive Proxy Statement”). This communication may be deemed to
be solicitation material in respect of the merger with FCB.
Investors and security holders of CPEX are urged to read the
Definitive Proxy Statement and the other relevant materials (when
they become available) because such materials will contain
important information about CPEX and the proposed transaction with
FCB. The Definitive Proxy Statement and other relevant materials
(when they become available), and any and all other documents filed
by CPEX with the SEC, may be obtained free of charge at the SEC’s
website at www.sec.gov. In addition,
investors and security holders may obtain free copies of the
documents CPEX files with the SEC by directing a written request to
CPEX Pharmaceuticals, Inc., 2 Holland Way, Exeter, NH 03833,
Attention: Chief Financial Officer. Copies of CPEX’s filings with
the SEC may also be obtained at the “Investors” section of CPEX’s
website at www.cpexpharm.com/investor.htm.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE
PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS (WHEN THEY BECOME
AVAILABLE) BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH
RESPECT TO THE PROPOSED TRANSACTION WITH FCB.
CPEX and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the security
holders of CPEX in connection with the proposed transaction with
FCB. Information about those directors and executive officers of
CPEX, including their ownership of CPEX securities, is set forth in
the Definitive Proxy Statement (filed with the SEC on February 4,
2011) and in the proxy statement for CPEX’s 2010 Annual Meeting of
Stockholders (filed with the SEC on April 9, 2010), as supplemented
by other CPEX filings with the SEC. Investors and security holders
may obtain additional information regarding the direct and indirect
interests of CPEX and its directors and executive officers in the
proposed transaction with FCB by reading the proxy statements and
other public filings referred to above.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Certain items in this document may constitute forward-looking
statements within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve certain risks and uncertainties
that could cause actual results to differ materially from those
indicated in such forward-looking statements, including, but not
limited to: the proposed transaction with FCB; the performance of
CPEX; the benefits of the proposed transaction with FCB and such
other risks and uncertainties as are detailed in the Definitive
Proxy Statement, in CPEX’s Annual Report on Form 10-K filed with
the SEC on March 29, 2010, and in the other reports that CPEX
periodically files with the SEC. Copies of CPEX’s filings with the
SEC may be obtained by the methods described above. CPEX cautions
investors not to place undue reliance on the forward-looking
statements contained in this document or other filings with the
SEC.
The statements in this document reflect the expectations and
beliefs of CPEX’s management only as of the date of this document
and subsequent events and developments may cause these expectations
and beliefs to change. CPEX undertakes no obligation to update or
revise these statements, except as may be required by law. These
forward-looking statements do not reflect the potential impact of
any future dispositions or strategic transactions, including the
proposed transaction with FCB, that may be undertaken. These
forward-looking statements should not be relied upon as
representing CPEX’s views as of any date after the date of this
document.
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