Concerned Stockholders of Forte Biosciences and Its Independent Director Candidates Share Key Facts that Reinforce the Need for Urgent Change in the Company’s Boardroom
September 06 2023 - 3:15PM
Business Wire
Exposes Misrepresentations and Distortions
Included in Forte’s Recent Presentation
Encourages Stockholders to Vote for
Independent Director Candidates Michael Hacke and Chris McIntyre on
the WHITE Proxy Card Ahead of Forte’s
Upcoming Annual Meeting on September 19th
Camac Partners, LLC (“Camac”) and ATG Capital Management, LLC
(“ATG”) (together with the other participants in their
solicitation, the “Concerned Stockholders,” the “Group” or “we”)
collectively own approximately 8.5% of the outstanding common stock
of Forte Biosciences, Inc. (Nasdaq: FBRX) (“Forte” or the
“Company”). Today, the Group and its independent director
candidates – Michael Hacke and Chris McIntyre – responded to
misrepresentations and distortions included in the Company’s recent
presentation. Messrs. Hacke and McIntyre have been nominated by the
Group for election to Forte’s Board of Directors (the “Board”) at
the upcoming Annual Meeting of Stockholders (the “Annual Meeting”)
currently scheduled for September 19, 2023.
As a reminder, the Group recently filed its own
presentation that details why it believes Forte is in urgent
need of boardroom change following years of poor performance and
worst-in-class governance under Chairman and CEO Dr. Paul
Wagner.
Michael Hacke and Chris McIntyre, the Group’s independent
director candidates, commented:
“While we have been nominated by Camac and supported by ATG, we
are independent and are firmly committed to acting in the best
interests of all Forte stockholders and stakeholders. We believe
that the Company would benefit from having independent individuals
with capital allocation and investment expertise in the boardroom
following the destruction of nearly 95% in stockholder value since
Forte’s IPO. While it is clear to us that fresh perspectives are
needed on the Board, we have no pre-set agenda or pre-conceived
notions regarding Forte and would act with an open mind if elected
by stockholders. Our focus would be on helping the Board improve
Forte’s governance and thoroughly and objectively evaluate all
options to maximize stockholder value.”
The Group encourages stockholders to consider the facts before
deciding which individuals to support at the upcoming Annual
Meeting:
Forte’s
Myth
The
Facts
- “[…] Camac’s […] purpose is to co-opt the cash for a value
potentially below the current share price and destroy value for the
majority of stockholders.”
- The Company is utilizing scare tactics as a defense for the
Board’s indefensible poor performance and anti-stockholder actions.
Forte’s equity is down nearly 95% over Drs. Wagner and Lawrence
Eichenfield’s tenures.
- Our Group has repeatedly made clear that there needs to be
accountability in the boardroom and is not demanding liquidation.
Rather, we want all directors on the Board to thoroughly and
objectively investigate paths to maximizing stockholder value.
- Our independent director candidates – Messrs. Hacke and
McIntyre – are open to exploring all options to improving Forte’s
performance, strategy and governance.
- “[…] Forte believes it is […] not in the interest of
shareholders to destroy value by liquidating the company for the
benefit of a minority of opportunistic 13D filers.”
- The only proposal our Group has put forward is the nomination
of two independent directors, who would constitute a small minority
of the Board, if elected. Additionally, stockholders cannot
liquidate the Company outright, as suggested by Forte.
- Instead of engaging with the multiple 13D filers last year, who
at the time collectively comprised nearly 40% of the outstanding
shares, the Board pursued a series of anti-stockholder and dilutive
actions.
- This included a dilutive and seemingly defensive at-the-market
offering of 5.6 million shares in August 2022 without any
justifiable business purpose.
- The Board also adopted a “poison pill” with a 10% primary
trigger as a defensive maneuver in response to legitimate feedback
from significant stockholders.
- The Board then waived the pill for select investors to
participate in the highly dilutive 2023 Private Placement.
- “[$25 million] offering has no discount to market price and no
dilutive warrant coverage […]”
- The Board’s 2023 Private Placement was extremely dilutive, as
it involved placing over 15 million shares of Forte stock with
hand-picked investors at a price well below the Company’s net cash
per share.
- The Board issued over 71% of the outstanding shares on a
pre-issuance basis, and over 118% of the outstanding shares on a
pre-issuance basis when factoring in the pre-funded warrants.
- Further, the 2023 Private Placement was done just in advance of
the record date after the Board delayed the Annual Meeting.
- “[The] Forte transaction [was] favorable vs. comparable recent
biotech transactions.”
- Forte misleadingly uses so-called “comparable” transactions in
its presentation to defend its highly dilutive 2023 Private
Placement and make it seem like these companies also raised money
at a significant discount to cash balances.
- Forte’s egregious comparisons do not use the companies’ net
cash balances, so they do not account for the companies’
significant liabilities. In addition, Forte also uses stale data
instead of the balance sheets as of June 30, 2023.
- In fact, using the up-to-date figures and calculating net cash
balances to account for the significant corporate debt at these
companies shows that both had significant debt well in excess of
cash balances at the time of the companies’ respective fundraises.
- Only Forte raised money at a discount
to its net cash and at prices well below its liquidation
values.
- Further, both of these companies have drugs farther along in
the clinical development stage (e.g., Phase 2 and Phase 3),
compared to Forte, which is currently in the pre-clinical stage for
FB-102.
- We have been unable to find a single capital raise done at
such a significant discount to net cash. Therefore, what management
and the Board did in its 2023 Private Placement is seemingly
without precedent and we believe was solely done to further
entrench themselves.
- “90% of drugs tested in biotech companies fail. A failure of a
molecule in development is not a failure of management.”
- Our Group’s concerns lie not only with the ineptitude of
management, but also with its significant misalignment with
stockholders.
- It is management’s responsibility to advance the pipeline
development and is therefore to blame for the unexpected failure of
Forte’s singular asset for atopic dermatitis – FB-401 – in its
Phase 2 clinical trial in 2021.
- That same year, when Forte’s stock price was down 94%, the
Board awarded Dr. Wagner total compensation (including a cash
bonus, stock and option awards) of $5.4 million.
- Following this failure, the Company made a highly speculative
pivot to the development of FB-102 for autoimmune diseases in 2022.
- That year, when Forte’s stock price was down another 55%, the
Board granted Dr. Wagner his largest cash bonus to date.
- Despite Forte peddling FB-102 as demonstrating potentially
“best in class activity,” the fact is that the compound is still in
preclinical indication and has been met with skepticism by
investors given the risks associated with entering a crowded market
with little competitive advantage.
- “[…] Company’s counsel made good faith efforts to come to
agreement with Camac.”
- Camac first attempted to engage with Forte to avoid a proxy
contest and reach a mutually agreeable resolution, which was
rebuffed.
- Despite Camac’s repeated good faith attempts, the Board
conducted a highly dilutive private placement in July, which
essentially sold nearly the entire Company away from existing
stockholders and reconstituted the investor base – all at prices
well under liquidation value.
- As recently as last month, before our Group filed its
definitive proxy statement, we attempted to reach a constructive
resolution with the Company. Our Group has repeatedly tried to
speak with management directly in hopes of resolving this matter
privately and putting this contest behind us. We remain interested
in a virtual or in-person meeting with Dr. Wagner or other members
of the Board.
- “Camac is nominating 2 directors to the Forte board […who] have
no biotechnology/drug development experience, no science or medical
background […]”
- Our Group nominated independent individuals whose experience
can address gaps on Forte’s Board, which is currently comprised of
directors who possess biotechnology and drug development
experience, and have track records of disregarding investor
feedback, taking anti-stockholder actions and destroying value.
- In contrast, Messrs. Hacke and McIntyre collectively possess
investment, capital markets and capital allocation expertise that
would be additive to Forte’s boardroom.
- Meanwhile, Drs. Wagner and Eichenfield have overseen the
destruction of approximately 95% of stockholder value since serving
on Forte’s Board.
- We question why the Company is fighting significant
stockholders’ requests for minority representation on the Board so
intensely.
***
VOTE “FOR” THE CONCERNED STOCKHOLDERS’
HIGHLY QUALIFIED NOMINEES ON THE WHITE
PROXY CARD AHEAD OF FORTE’S ANNUAL MEETING ON SEPTEMBER 19,
2023.
ONLY YOUR LATEST DATED
VOTE COUNTS. IF YOU VOTED FOR THE COMPANY’S NOMINEES
PREVIOUSLY, A LATER DATED VOTE FOR THE CONCERNED STOCKHOLDERS’
NOMINEES WILL OVERRIDE YOUR PRIOR VOTING INSTRUCTIONS.
IF YOU HAVE ANY QUESTIONS REGARDING HOW TO
VOTE, PLEASE CALL SARATOGA PROXY CONSULTING AT (888) 368-0379 OR
(212) 257-1311 OR BY EMAIL AT INFO@SARATOGAPROXY.COM
***
About Camac
Camac is a private investment firm founded in 2011. Camac
focuses on extremely mispriced assets in discrete pockets of
opportunity. Camac prides itself on its unique sourcing, flexible
mandate, and constant focus on non-competitive opportunities. Its
investments are long term in nature and focused on compounding
capital over several decades rather than months or years.
About ATG
ATG is a privately-held investment firm that manages investment
vehicles for select accredited investors. Founded by Gabi
Gliksberg, ATG invests primarily in public equity markets,
utilizing alternative strategies and shareholder activism, in
pursuit of providing superior, long term investment returns. Visit
atgfund.com for more information.
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version on businesswire.com: https://www.businesswire.com/news/home/20230906702794/en/
Saratoga Proxy Consulting LLC John Ferguson / Joe Mills,
212-257-1311 info@saratogaproxy.com
Longacre Square Partners Charlotte Kiaie / Ashley Areopagita,
646-386-0091 concernedFBRXstockholders@longacresquare.com
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