Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), an oncology company
developing innovative targeted medicines and artificial
intelligence to find, fight and follow cancer, today issued the
following letter that it intends to mail to shareholders,
highlighting its belief in the value that will be created by its
recently announced transaction with Lantheus Holdings, Inc.
(“Lantheus”), and the uncertainty surrounding Velan Capital L.P.’s
(“Velan”) promised, but unproven, strategic plan.
Your Board strongly urges you to sign and
return Progenics’ WHITE Consent Revocation Card and discard any
Green Consent Cards you receive from Velan.
October 9, 2019
Dear Fellow Shareholder,
In the next few months, you will be asked to vote on two
important matters affecting the future of your investment in
Progenics:
- The first relates to whether you want to hand over control of
the Board of Directors and the Company to a minority shareholder
with no payment of a premium and no proven ability to execute
a commercial strategy. As you may be aware, Velan Capital,
L.P. (“Velan”), an 11.7% shareholder, recently launched a consent
solicitation campaign, attempting to gain control of five of the
seven seats on your Board. Velan is taking this action despite
numerous good-faith efforts by your Board to reach a reasonable
settlement that would have avoided the cost and disruption caused
by this campaign.
- At a later date, you will also be asked to vote on the proposed
sale of Progenics to Lantheus, a global leader in the development,
manufacture and commercialization of innovative diagnostic imaging
agents and products. Your Board negotiated this compelling
strategic transaction that delivers a premium and a 35% ownership
stake in the combined company with strong prospects for improved
top line growth, enhanced operational execution and significant
synergy opportunities. Additionally, the transaction provides
for an industry leading Board of Directors and a management
team with deep experience in the development, manufacturing and
commercialization of radiopharmaceuticals, proven in public
markets, to lead the combined company.
We believe the choice is clear in both of these matters: We urge
you to reject Velan’s unproven nominees and their uncertain,
undisclosed strategic plan. This will ensure that you and your
fellow shareholders can make a fully informed decision whether you
want the clear and compelling value that will be provided through
the transaction with Lantheus.
TRANSACTION WITH LANTHEUS WILL DELIVER
CLEAR AND COMPELLING VALUE TO ALL SHAREHOLDERS
After nine months of discussions, on October 2, 2019 Progenics
announced that it has entered into an agreement to be acquired by
Lantheus, a global leader in the development, manufacture and
commercialization of innovative diagnostic imaging agents and
products. Your Board strongly believes that this transaction, which
is expected to close in the first quarter of 2020, delivers
clear and compelling value to you, our shareholders:
- By leveraging Lantheus’ proven commercial expertise, we believe
that the transaction will further advance AZEDRA®’s launch and
deliver substantial revenue growth.
- Supported by Lantheus’ proven manufacturing, radioisotope
supply chain and clinical development expertise, the combination is
expected to allow the company to maximize the value of its
portfolio, including advancing its promising late-stage
clinical candidate PyL toward commercialization and serving as a
catalyst for Progenics’ Phase 2 trial of 1095, driving enhanced
revenue growth over the long term.
- With improved top line growth, revenue diversification,
operational execution and synergy opportunities, the transaction is
expected to enhance the Company’s cash flow generation and deliver
significant EBITDA accretion in the future.
- Gives Progenics' shareholders the opportunity to participate in
the future growth of the combined company along with an implied
premium of 21.5% to the Company’s 30-day volume weighted average
closing stock price (“VWAP”) for the period ended October 1,
2019.
- Progenics shareholders will own ~35% of the combined company
and benefit from value creation and growth across the entire
enterprise, while benefiting from the cost savings and future cost
avoidance that Progenics likely could not achieve as a standalone
company.
CONSENTING TO VELAN WILL LEAD TO
UNCERTAINTY
Compare all of this to Velan’s disruptive actions, which are
intended to gain control of the Board of Directors, Management and
business of Progenics with no premium and an undisclosed and
untested strategy. Note also that Velan has already publicly
denounced the value-enhancing transaction with Lantheus. Velan
jumped to this conclusion without even taking the time to review
the complete set of information about the transaction that both the
Company and Lantheus will make available before the shareholder
vote takes place. Given Velan’s intemperate behavior, we believe it
is unlikely that its hand-picked nominees would fully and fairly
consider the announced transaction. The operational plan
proposed by Velan is unknown, but suggests significant Board
disruption and yet-to-be-determined management leadership. By
contrast, in the proposed transaction with Lantheus, there will be,
immediately in place, proven and consistent Board oversight and
Management leadership.
Shareholders should sharply scrutinize the Velan nominees’
commitment to proper governance practices. Velan appears to have
already bound them to an undisclosed strategic plan – long before
any of the nominees would even have an opportunity to step foot in
the boardroom. In fact, as Velan has disclosed, its nominees
have already been collaborating with Velan on this plan. This type
of predetermined behavior could jeopardize the ability of the Board
to make fully informed and carefully considered decisions on behalf
of ALL of the Company’s shareholders.
YOUR BOARD HAS LISTENED TO SHAREHOLDERS,
IS IMPLEMENTING VALUABLE FEEDBACK AND HAS MADE SIGNIFICANT EFFORTS
TO SETTLE WITH VELAN
Your Board heard the voices of its shareholders following the
Company’s 2019 Annual Meeting, as evidenced by the Company’s
recently announced governance enhancements and ongoing shareholder
outreach efforts. These enhancements are in addition to the
Company’s previously announced retention of Korn Ferry to help
identify new board candidates with relevant business, commercial
and development expertise. We also accepted the resignations of two
directors who were not re-elected at the 2019 Annual Meeting. These
resignations are effective next week.
Upon receiving feedback from shareholders, your Board has
continued its good faith efforts to settle with Velan. In contrast,
Velan has taken inconsistent settlement positions and even refused
to accept a settlement framework from the Company that was
virtually identical to the first proposal Velan made to the Board
in August. Indeed, our last settlement offer, would have given
Velan the right to select three out of eight directors and an
expense reimbursement in exchange for a standstill that would have
lasted less than a year.
Velan's approach to settlement, in our view, was in bad faith
and made a settlement in the best interests of all shareholders
impossible. Rather than negotiate, Velan launched its consent
solicitation in a clear attempt to impede the Board’s
implementation of governance and board composition changes based on
substantial shareholder feedback. Velan’s refusal to withdraw its
consent solicitation and pursue control of the Board at this time
creates the risk that shareholders will be prevented from
participating in a fully informed vote on the Lantheus
transaction.
While your Board continues to take steps to serve the best
interests of all shareholders, shareholders should strongly
question whether Velan’s candidates are truly independent and
whether they and Velan will look out for anyone other than
themselves.
PROTECT THE FUTURE OF YOUR INVESTMENT –
SIGN AND RETURN THE WHITE CONSENT REVOCATION CARD
We urge you to support your Company’s Board by signing,
dating and returning the enclosed WHITE Consent Revocation Card
TODAY. If you receive a Green Consent Card from Velan, please
discard it. If you have any questions or require
assistance, please contact Progenics’ proxy solicitor, MacKenzie
Partners, Inc. toll-free at (800) 322-2885 or
PGNX@mackenziepartners.com.
Sincerely,
The Progenics Board of Directors
About PROGENICS
Progenics is an oncology company focused on the development and
commercialization of innovative targeted medicines and artificial
intelligence to find, fight and follow cancer, including:
therapeutic agents designed to treat cancer (AZEDRA®, 1095, and
PSMA TTC); prostate-specific membrane antigen (“PSMA”) targeted
imaging agents for prostate cancer (PyL™ and 1404); and imaging
analysis technology (aBSI and PSMA AI). Progenics has three
commercial products, AZEDRA, for the treatment of patients with
unresectable, locally advanced or metastatic pheochromocytoma or
paraganglioma (rare neuroendocrine tumors of neural crest origin)
who require systemic anticancer therapy; and oral and subcutaneous
formulations of RELISTOR® (methylnaltrexone bromide) for the
treatment of opioid-induced constipation, which are partnered with
Bausch Health Companies Inc.
Cautionary Statement Regarding Forward-Looking
Statements
This document contains projections and other “forward-looking
statements” regarding future events. Statements contained in this
communication that refer to Progenics’ estimated or anticipated
future results or other non-historical facts are forward-looking
statements that reflect Progenics’ current perspective of existing
trends and information as of the date of this communication and
include statements regarding Progenics’ strategic and operational
plans and delivering value for stockholders. Forward looking
statements generally will be accompanied by words such as
“anticipate,” “believe,” “plan,” “could,” “should,” “estimate,”
“expect,” “forecast,” “outlook,” “guidance,” “intend,” “may,”
“might,” “will,” “possible,” “potential,” “predict,” “project,” or
other similar words, phrases or expressions. Such statements are
predictions only, and are subject to risks and uncertainties that
could cause actual events or results to differ materially. All
statements, other than historical facts, including the expected
timing of the closing of the proposed transaction between Progenics
and Lantheus (the “merger”); the ability of the parties to complete
the merger considering the various closing conditions; the expected
benefits of the merger, such as efficiencies, cost savings,
synergies, revenue growth, creating stockholder value, growth
potential, market profile, enhanced competitive position, and
financial strength and flexibility; the competitive ability and
position of the combined company; and any assumptions underlying
any of the foregoing, are forward-looking statements. Important
factors that could cause actual results to differ materially from
Progenics’ and Lantheus’ plans, estimates or expectations could
include, but are not limited to: (i) Progenics or Lantheus
may be unable to obtain stockholder approval as required for the
merger; (ii) conditions to the closing of the merger may not be
satisfied; (iii) the merger may involve unexpected costs,
liabilities or delays; (iv) the effect of the announcement of the
merger on the ability of Progenics or Lantheus to retain and hire
key personnel and maintain relationships with customers, suppliers
and others with whom Progenics or Lantheus does business, or on
Progenics’ or Lantheus’ operating results and business generally;
(v) Progenics’ or Lantheus’ respective businesses may suffer as a
result of uncertainty surrounding the merger and disruption of
management’s attention due to the merger; (vi) the outcome of any
legal proceedings related to the merger; (vii) Progenics or
Lantheus may be adversely affected by other economic, business,
and/or competitive factors; (viii) the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement; (ix) risks that the merger
disrupts current plans and operations and the potential
difficulties in employee retention as a result of the merger; (x)
the risk that Progenics or Lantheus may be unable to obtain
governmental and regulatory approvals required for the transaction,
or that required governmental and regulatory approvals may delay
the transaction or result in the imposition of conditions that
could reduce the anticipated benefits from the proposed transaction
or cause the parties to abandon the proposed transaction; (xi)
risks that the anticipated benefits of the merger or other
commercial opportunities may otherwise not be fully realized or may
take longer to realize than expected; (xii) the costs and
management distraction attendant to a proxy contest or consent
solicitation; (xiii) the cost, timing and unpredictability of
results of clinical trials and other development activities and
collaborations; (xiv) other risks to the consummation of the
merger, including the risk that the merger will not be consummated
within the expected time period or at all; and (xv) uncertainties
associated with the consent solicitation engaged in by Velan
Capital, L.P. and certain other participants (the “Velan Consent
Solicitation”). More information concerning Progenics and
such risks and uncertainties is available on its website, and in
its press releases and reports it files with the Securities and
Exchange Commission (“SEC”), including those risk factors included
in its Annual Report on Form 10-K for the year ended December 31,
2018, as updated in its subsequent Quarterly Reports on Form 10-Q.
Progenics is providing the information in this document as of its
date and, except as expressly required by law, Progenics disclaims
any intent or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or circumstances or otherwise.
Important Additional Information For
Stockholders
This document does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to appropriate
registration or qualification under the securities laws of such
jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of
the U.S. Securities Act of 1933, as amended.
In connection with the Velan Consent Solicitation, Progenics has
filed a definitive consent revocation statement and accompanying
WHITE consent revocation card with the SEC, which will also be
mailed to Progenics’ stockholders. PROGENICS’ STOCKHOLDERS ARE
STRONGLY ENCOURAGED TO READ THE DEFINITIVE CONSENT REVOCATION
STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND THE
ACCOMPANYING WHITE CONSENT REVOCATION CARD BECAUSE THEY CONTAIN
IMPORTANT INFORMATION. Stockholders can obtain free copies of
Progenics’ consent revocation statement, any amendments or
supplements to the consent revocation statement, and other
documents filed with the SEC by Progenics in connection with the
consent revocation solicitation through the website maintained by
the SEC at https://www.sec.gov.
In addition, in connection with the proposed merger, Lantheus
intends to file with the SEC a registration statement on Form S-4
that will include a joint proxy statement of Progenics and Lantheus
that also constitutes a prospectus of Lantheus. Each of
Progenics and Lantheus also plan to file other relevant documents
with the SEC regarding the proposed merger. Any definitive
joint proxy statement/prospectus (if and when available) will be
mailed to stockholders of Progenics and Lantheus. INVESTORS
AND SECURITY HOLDERS OF PROGENICS AND LANTHEUS ARE STRONGLY
ENCOURAGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER
DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be
able to obtain free copies of the registration statement and the
joint proxy statement/prospectus (if and when available) and other
documents filed with the SEC by Progenics or Lantheus through the
website maintained by the SEC at https://www.sec.gov.
Copies of the documents filed with the SEC by Progenics will
also be available free of charge on Progenics’ website at
https://www.progenics.com or by contacting Progenics’ Investor
Relations Department by email at mdowns@progenics.com or by phone
at (646) 975-2533. Copies of the documents filed with the SEC
by Lantheus will also be available free of charge on Lantheus’
internet website at https://www.lantheus.com or by contacting
Lantheus’ Investor Relations Department by email at ir@lantheus.com
or by phone at (978) 671-8001.
Certain Information Regarding Participants
Progenics, its directors, executive officers and certain
employees may be deemed participants in the solicitation of consent
revocations in connection with the Velan Consent Solicitation. In
addition, Progenics, Lantheus, and their respective directors and
executive officers may be considered participants in the
solicitation of proxies in connection with the proposed
merger.
Information regarding the participants of Progenics in the
solicitation of consent revocations and a description of their
direct and indirect interests, by security holdings or otherwise,
is contained in Progenics’ definitive consent revocation statement
filed with the SEC on October 8, 2019 in response to the Velan
Consent Solicitation. Information regarding the participants
of Progenics in the proxy solicitations and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC regarding the proposed
merger when they become available. Other information about the
directors and executive officers of Progenics is set forth in
Progenics’ Annual Report on Form 10-K for the year ended December
31, 2018, which was filed with the SEC on March 15, 2019 and
amended on April 30, 2019, and its definitive proxy statement for
its 2019 annual meeting of stockholders, which was filed with the
SEC on May 30, 2019.
Information about the directors and executive officers of
Lantheus is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2018, which was filed with the SEC on
February 20, 2019, its definitive proxy statement for its 2019
annual meeting of stockholders, which was filed with the SEC on
March 15, 2019 and its Current Report on Form 8-K, which was filed
with the SEC on March 25, 2019. Other information regarding the
participants of Lantheus in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC regarding the proposed transaction when they become
available.
You may obtain these documents (when they become available) free
of charge through the website maintained by the SEC at
https://www.sec.gov and from Investor Relations at Progenics or
Lantheus as described above.
Investor ContactMelissa DownsInvestor
Relations(646) 975-2533mdowns@progenics.com
Additional Investor ContactBob Marese / David
WhisselMacKenzie Partners, Inc.(212) 929-5500
Media ContactMichael Freitag / James Golden /
Clayton ErwinJoele Frank, Wilkinson Brimmer Katcher(212)
355-4449
(PGNX-F)
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