Adamis Pharmaceuticals Corporation (NASDAQ: ADMP), a
biopharmaceutical company developing and commercializing specialty
products for allergy, opioid overdose, respiratory and inflammatory
diseases, issued the following letter to stockholders from Chief
Executive Officer David J. Marguglio.
ADAMIS HAS NEW LEADERSHIP COMMITTED TO
ENHANCING SHAREHOLDER VALUE
YOUR SUPPORT AT THE ANNUAL MEETING IS
CRITICAL TO OUR FUTURE SUCCESS
July 21, 2022
Dear Fellow Stockholder:
Thank you for your ongoing investment in Adamis
Pharmaceuticals Corporation (“we,” “our,” “Adamis” or the
“Company”). Like many companies in the biotechnology and
pharmaceutical sectors, Adamis has admittedly encountered setbacks
and disappointments, along with some successes, throughout its
pursuit of breakthrough treatments that can improve patients’
lives. However, I firmly believe we have an opportunity starting in
2022 to begin a new day and chart a new path to enhanced value
creation under new leadership. This is why I am asking that
you vote to support all of the Company’s proposals at our upcoming
Annual Meeting of Stockholders (the “Annual Meeting”) on August 12,
2022.
When I accepted the CEO role in May of this
year, I was well aware of both the opportunities and challenges
that lay ahead. On the one hand, we have two commercial products
(SYMJEPI® and ZIMHI™), as well as a potential treatment for
COVID-19 in an ongoing Phase 2/3 clinical trial; on the other hand,
our stock price has languished. Over the last two months, we have
begun implementing multiple initiatives designed to ultimately
realign the Company’s stock price with its true value and lay a
strong foundation for future success. Moving forward, we will
continue seeking practical and cost-effective initiatives to fuel
sustainable long-term growth and enhanced value for stockholders,
patients, and healthcare providers. But in order to do this
and avoid dangerous stagnation, your support is needed at the
Annual Meeting next month.
I encourage you to review the Proxy Statement
(found here link) and accompanying materials that you should have
received in the mail. No matter how much stock you own, your views
and your vote are highly valued. Please reach out to management
through our proxy solicitor, Saratoga Proxy Consulting
(info@saratogaproxy.com), with any feedback or questions.
OVERVIEW: STEPS WE ARE TAKING TO DRIVE
ENHANCED VALUE FOR YOU
I recognize and appreciate that many
stockholders are frustrated with many aspects of the old Adamis. To
help begin to address this, my team and I are working hard to
elevate the Company’s culture and increase value creation
opportunities by executing on the following:
- Growing Cash Flow from
Product Sales: I believe that growing cash flow from our
existing products is vital to our growth, as it will both increase
value and decrease ongoing capital requirements. We have been
working closely with our commercial partner to expand opportunities
to maximize the success of the recent commercial launch of ZIMHI
and the forthcoming relaunch of SYMJEPI (following a voluntary
recall in March). These are in early stages of development, and we
will provide more detail as new marketing initiatives are
implemented.
- Improving the Supply
Chain: Earlier this year, issues at one of our
manufacturing partner’s sites led to a voluntary recall and
subsequent delay in manufacturing and replenishing the commercial
supply of SYMJEPI. In order to mitigate the probability of a future
supply interruption, we have begun a process of identifying and
qualifying backup suppliers for critical components of our
commercial supply chain. In parallel, we are also working directly
with our current suppliers and manufacturing partners to pursue
both immediate and longer-term process improvements, with the goals
of both strengthening quality assurance and decreasing our overall
cost of goods.
- Expanding the
Pipeline: I believe that sustained long-term growth in our
industry requires a robust and valuable development pipeline. In
addition to evaluating multiple opportunities to develop Tempol for
indications beyond the treatment of COVID-19, including other acute
respiratory diseases, a robust expansion of our pipeline will
include efforts to identify companies, products and/or technologies
that we believe are attractive candidates for acquisition,
in-licensing, or other strategic transactions, which we may pursue.
We have already identified two opportunities and we intend to
pursue targets with the goal of being accretive to the Company in
the near-term and diversifying our pipeline to further long-term
growth.
- Recruiting and Hiring Key
Personnel: Implementing significant changes to enable
value-creating growth requires the Company to attract, motivate and
retain key employees to contribute to this effort. Unfortunately,
in this ultra-competitive job market, the Company’s depressed stock
price and our lack of a usable employee equity incentive plan have
created significant employment challenges. To combat this, we have
engaged multiple human resource and compensation consultants to
assist in our efforts to make the Company competitive and
attractive to current and prospective employees. However, we will
remain significantly hamstrung without the critical equity
incentive component discussed in Proposal 3 below.
- Improving Stockholder
Engagement: Seeing the execution of these value-creating
initiatives fully reflected in the Company’s common stock price, I
believe will require better communications with the market. I am
personally committed to overseeing a more robust investor relations
program. We intend to increase the frequency and reach of our press
releases with both targeted distribution and amplification through
social media, as well as revamp the format of our quarterly
investor calls to discuss and provide additional information
relating to our filings with the SEC and more opportunity to engage
with analysts and stockholders. Additionally, we are exploring new
ways to more actively and effectively engage with current and
potential stockholders in a manner consistent with legal and
regulatory requirements.
WHY THE PROPOSALS AT THE 2022 ANNUAL
MEETING WILL DEFINE OUR FUTURE
All of this leads me to the importance of the
upcoming Annual Meeting, where we are asking you to vote
FOR all of the following proposals:
- Electing a slate of five
directors;
- Authorizing the Board of Directors
to effect a reverse stock split of our outstanding common stock
(the “Reverse Stock Split”), if the Board determines it to be
appropriate;
- Amending our 2020 Equity Incentive
Plan to help attract and retain talent;
- Providing a non-binding ‘say on
pay’ for 2021 compensation of our named executive officers;
- Ratifying our selection of our
independent registered public accounting firm; and
- Approving the adjournment of the
Meeting, if necessary, to solicit additional proxies if there are
not sufficient votes at the time of the meeting to adopt the
reverse stock split proposal.
I want to provide you with additional color on
four of these proposals, while underscoring why we believe
proposals 2 and 3 are imperative to both the success and continued
viability of the Company.
- Election of
Directors: I want to briefly highlight the changes from
last year’s slate of director candidates for election to the Board
of Directors. In part in response to stockholder feedback, the
composition of the Board was changed to increase the number of
independent directors from three to four, reducing management
influence and increasing Board independence and diversity.
Additionally, two of our five directors are new since last year’s
annual meeting of stockholders and have a depth of relevant
industry experience and fresh perspectives.
- Reverse Stock
Split: As described in our Proxy Statement, stockholder
approval of this proposal would grant the new Board the discretion
to determine whether to implement a Reverse Stock Split and
determine the appropriate timing and ratio. The primary reason for
this proposal is to ensure that the Company can meet Nasdaq’s
minimum $1.00 bid price requirement for our common stock. In June,
in response to the Company’s commitment to take actions to cure the
listing deficiency, including seeking shareholder approval to
effect a reverse stock split, Nasdaq agreed to extend our period to
regain compliance. Absent the ability and discretion to implement a
reverse stock split, there is simply no assurance that our stock
price will exceed the required Nasdaq minimum bid price even if
there are positive future developments at the Company, an overall
improvement in the stock markets, or other favorable future
developments. We believe it should be obvious that a delisting from
the Nasdaq Capital Market would not be in stockholders’ best
interests and would be very detrimental for the Company and its
future prospects. Less obvious may be the overhang negatively
affecting the market price of our common stock that we believe the
risk of a Nasdaq delisting has created. We want to address
the Nasdaq delisting uncertainty now as part of our regular annual
meeting process, rather than risk the additional time and
uncertainty, as well as the significant expense, of calling a
special meeting of stockholders to once again seek approval for a
reverse stock split.Apart from these considerations, we
believe that the reverse stock split may be critical to our efforts
to deliver increased future value to you. As mentioned above, an
important element of our vision for creating future value for
stockholders involves expanding our product and technology
pipeline, which will likely involve identifying companies, products
and/or technologies that we believe are attractive candidates for
acquisition, in-licensing or other strategic transactions. With the
present 15 million authorized shares of common stock currently
available for future issuance, it is unlikely that we will be able
to execute any significant future transactions. The additional
available authorized shares that would result from a reverse stock
split would allow us to be in a position to offer equity, where
appropriate, as part of such transactions and move quickly on these
opportunities, which we believe will have beneficial consequences
to the Company’s future direction and prospects and to our
stockholders.
- Equity Incentive
Plan: Just as access to equity capital will
enable the Company to make acquisitions, the availability of
employee equity plans is necessary to attract, motivate and retain
top talent among employees. In the current ultra-competitive job
market, the Company cannot compete for highly qualified personnel
without the ability to offer stock options or other equity
incentives. It is without hyperbole that I say we believe
stockholder support for this proposal is necessary for the future
success of the Company.
- ‘Say-on-Pay’: I
believe there is confusion among at least some investors regarding
Proposal 4, and I believe it is important for stockholders to
understand the intent of this proposal. Under the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010, stockholders are
entitled to vote on an advisory, non-binding basis, regarding last
year’s (2021) compensation for our named executive officers.
To be clear, the Company is not seeking stockholder
approval of current or future bonuses, raises, or other changes to
executive officer compensation. Consistent with all public
companies, compensation decisions are determined by, and at the
sole discretion of, the independent directors who comprise the
Compensation Committee. This proposal requests your feedback on
prior (2021) compensation decisions. In making future compensation
decisions, the Compensation Committee will consider investor
feedback along with other metrics which may, without limitation,
include individual performance against stated objectives, corporate
goals, peer group and salary survey data, and advice from
independent compensation consultants. Moving forward, the Company
intends to provide stockholders with additional discussion in the
Company’s future proxy statements and (as appropriate) annual
reports regarding future compensation decisions.
I want to also take this opportunity to briefly
address our recent Series C Convertible Preferred Stock offering
transaction. We believe that high market volatility, as well as
other factors, have had a negative impact on proxy response rates
for many smaller Nasdaq-listed companies, in several instances
limiting their ability to even reach a quorum for their annual or
special meeting of stockholders. With the significant expense of
time and money required for even one meeting, we observed a number
of companies taking the step of creating a class of preferred stock
with additional voting power, especially in connection with reverse
stock split proposals, which under Delaware law and our charter
documents require approval by a majority of the votes of the
outstanding shares rather than simply a majority of the votes cast
on the proposal at the meeting.
On July 6th, Adamis announced a small offering
of preferred stock with multiple votes per share, with the intent
of increasing the likelihood of receiving sufficient votes at the
Annual Meeting to approve Proposal 2, if a majority of the common
stock voted in favor of the proposal. Please note that the
holders of this preferred stock may only vote on Proposals 2 and 6
and may only be voted in direct proportion to the final votes cast
by the holders of the common stock. The preferred stock
only serves to amplify the votes cast by holders of the common
stock. For example, if 30 million shares of the common stock were
voted for Proposal 2 and 20 million shares were voted against the
proposal, without the preferred stock the Reverse Stock Split
proposal would fail even though a significant majority of the
shares of common stock voted at the meeting approved the proposal.
However, when the preferred stock is voted in the same proportion
as the common (60/40), the combined 1,830 million votes ‘for’ would
represent 58% of the shares eligible to vote and the proposal would
pass. If Proposal 2 is approved, the Company’s current intention is
to redeem the preferred stock from the investor as and when
permitted under the documents relating to the preferred stock, and
the Series C Preferred would no longer be outstanding.
In closing, I would like to once again encourage
you to review the Proxy Statement for additional information and
disclosures about the proposals to be voted upon at the Annual
Meeting. I hope this letter has further clarified why new
leadership believes Proposals 2 and 3 are essential to the future
success of the Company.
Finally, I have extremely high expectations for
the future success of Adamis, and I would like to thank all of you
for your continued support. I look forward to remaining aligned
with you and championing your interests for years to come.
Sincerely,
David J. MarguglioChief Executive Officer and Director
***
If you have any questions or need
assistance voting your shares,please call Saratoga
Proxy Consulting LLC at one of the numbers below:
520
8th Avenue New
York, NY 10018
(212)
257-1311 (888) 368-0379
[End of Letter]
About Adamis Pharmaceuticals
Adamis Pharmaceuticals Corporation is a specialty
biopharmaceutical company primarily focused on developing and
commercializing products in various therapeutic areas, including
allergy, opioid overdose, respiratory and inflammatory disease. The
Company’s SYMJEPI® (epinephrine) Injection products are
approved by the FDA for use in the emergency treatment of acute
allergic reactions, including anaphylaxis. The
Company’s ZIMHI™ (naloxone) Injection product is approved
for the treatment of opioid overdose. Tempol is in development for
the treatment of patients with COVID-19 and a Phase 2/3 clinical
trial is underway. For additional information about Adamis
Pharmaceuticals, please visit our website and follow us
on Twitter and LinkedIn.
Additional Information and Where to Find It
In connection with the Company’s 2022 annual meeting of
stockholders described above (the “Meeting”), the Company filed a
definitive proxy statement (the “Proxy Statement”) with the
Securities and Exchange Commission (the “Commission”) on July 7,
2022. This press release does not contain all the information that
should be considered concerning the matters to be considered at the
Meeting, including the reverse stock split proposal, and is not
intended to form the basis of any investment decision or any other
decision in respect of such matters. The Company’s stockholders and
other interested persons are advised to read the Proxy Statement
and other documents filed in connection with the Meeting, as these
materials contain important information about the Company and the
proposals to be considered at the Meeting. The Company’s
stockholders may also obtain copies of the Proxy Statement and
other documents filed with the Commission, without charge, at
the Commission’s website at www.sec.gov, or by directing
a request to the Company’s corporate secretary c/o Adamis
Pharmaceuticals Corporation, 11682 El Camino Real, Suite 300, San
Diego, CA 92130.
Appointment of Proxy Solicitor and Participants in
Solicitation
We have engaged Saratoga Proxy Consulting LLC (“Saratoga”) to
assist us with the solicitation of proxies in connection with the
Meeting. We expect to pay Saratoga a fee of $25,000, plus
reimbursement for certain expenses related to its services.
The Company and its directors and executive officers may be
deemed participants in the solicitation of proxies from the
Company’s stockholders with respect to the proposals to be
considered at the Meeting. A list of the names of those directors
and executive officers and a description of their interests in the
Company is contained in the Company’s Annual Report for the year
ended December 31, 2021 on Form 10-K, as amended, and the
information contained in the Proxy Statement, which were filed with
the Commission and are available free of charge at
the Commission’s web site at www.sec.gov, as well as any
proxy supplement or amendments thereto. To the extent such holdings
of the Company’s securities may have changed since that time, such
changes have been or will be reflected on Statements of Change in
Ownership on Form 4 filed with the Commission, to the extent
required by applicable laws.
Forward Looking Statements
Certain information contained in this press release includes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, that are subject to
risks, uncertainties and other factors, including uncertainties
relating to the Company’s 2022 annual meeting of stockholders and
the proposals to be considered at the Meeting. We may, in some
cases, use terms such as “predicts,” “believes,” “potential,”
“continue,” “anticipates,” “estimates,” “expects,” “plans,”
“intends,” “may,” “could,” “might,” “will,” “should” or other words
that convey uncertainty of the future events or outcomes to
identify these forward-looking statements. Our forward-looking
statements are based on our current beliefs and expectations that
involve risks, potential changes in circumstances, assumptions, and
uncertainties. Any or all of the forward-looking statements may
turn out to be wrong or be affected by inaccurate assumptions we
might make or by known or unknown risks and uncertainties,
including, among others, the failure to obtain stockholder approval
for the reverse stock split proposal or other proposals to be
considered at the Meeting, as well as other risks, uncertainties
and factors described in the Company’s filings with
the Commission, including in the Company’s Annual Report for
the year ended December 31, 2021, and subsequent filings with
the Commission. As a result of such risks, uncertainties and
factors, the Company’s actual results may differ materially from
any future results, performance or achievements discussed in or
implied by the forward-looking statements contained herein. In
addition, forward-looking statements concerning our anticipated
future activities assume that we have sufficient funding to support
such activities and continue our operations and planned activities.
We cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements. You should not place undue reliance on
any forward-looking statements. Further, any forward-looking
statement speaks only as of the date on which it is made, and
except as may be required by applicable law, we undertake no
obligation to update or release publicly the results of any
revisions to these forward-looking statements or to reflect events
or circumstances arising after the date of this press release.
Certain risks, uncertainties and other factors relating to the
Company’s business are described in greater detail in the Company’s
filings from time to time with the Commission, including its Annual
Report on Form 10-K for the year ended December 31, 2021 and
subsequent filings with the Commission, which Adamis strongly
urges you to read and consider, all of which are available free of
charge on the Commission 's web site
at http://www.sec.gov.
Contacts
If you have any questions or need assistance
voting your shares, please call:
Saratoga Proxy Consulting LLC 520 8th AvenueNew
York, NY 10018(212) 257-1311 or (888) 368-0379
Adamis Investor RelationsRobert UhlManaging
DirectorICR Westwicke(619)
228-5886robert.uhl@westwicke.com
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