- Highlights the Company’s strong
progress, advancement of voclosporin, and value creation for all
shareholders
- Notes recent Board refreshment, deep
expertise in drug commercialization
- Believes ILJIN has offered no plan for
value creation
- Corrects ILJIN’s misrepresentations;
notes dissident rejected efforts to negotiate in good faith
- Recommends shareholders vote the YELLOW
proxy “FOR” all of Aurinia’s highly qualified nominees
Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH / TSX:AUP) (the
“Company”) today sent a letter to shareholders in connection
with the Company’s upcoming Annual General Meeting of Shareholders
(“AGM”) to be held on Wednesday, June 26, 2019. Shareholders of
record as of May 9, 2019 must submit their YELLOW proxy by 10:00 AM
Mountain Time on Monday, June 24, 2019.
The Company highlighted the following in its letter to
shareholders:
- Aurinia’s dramatic progress since
re-initiating the development of voclosporin in 2013 demonstrates
the effectiveness and strategic focus of the Company’s management
team and Board of Directors.
- The Company is well positioned for
continued growth, having quickly evolved into a well-capitalized,
late-stage clinical development company with multiple indications,
and is preparing for the commercialization of voclosporin in early
2021.
- ILJIN, a conglomerate engineering
company based in South Korea which already has a representative on
Aurinia’s Board, is seeking to appoint three additional Directors
representing 37.5% board control. This level of Board
representation far exceeds its less than 15% ownership stake in
Aurinia.
- ILJIN has offered no alternative
strategy for value creation or actionable insights.
- ILJIN’s nominees’ lack of experience in
commercialization and the U.S. pharmaceutical market would impede
the Company’s continued progress.
Vote using only the YELLOW proxy to support Aurinia and its
continued growth. Shareholders are encouraged to vote the YELLOW
proxy well in advance of the deadline on June 24, 2019 at 10:00 AM
Mountain Time. Shareholders with questions or requests for voting
assistance may be directed to Laurel Hill Advisory Group at
1-877-452-7184 toll free (1-416-304-0211 collect), or by email to
assistance@laurelhill.com.
A copy of the letter is available at Aurinia’s website of
www.auriniapharma.com/agm-materials, on EDGAR at www.sec.gov/edgar
and on SEDAR at www.sedar.com.
The full text of Aurinia’s letter to shareholders follows:
- - - - - - - -
June 7, 2019
Dear Shareholders,
You are facing an important decision regarding the future value
of your investment in Aurinia Pharmaceuticals (“Aurinia” or the
“Company”).
ILJIN SNT Co., Ltd. (“ILJIN”), a South Korea-based company, is
seeking to place three of its nominees on Aurinia’s Board of
Directors (the “Board”). In addition to failing to provide an
alternative strategy for value creation, the dissident has made a
series of misleading claims in an attempt to gain representation on
the Company’s Board far in excess of its ownership.
We strongly believe that adding ILJIN’s nominees would impede
the significant progress we have made in recent years and disrupt
Aurinia’s strong momentum as we approach critical milestones.
AURINIA HAS MADE STRONG PROGRESS TO DATE AND IS WELL
POSITIONED FOR CONTINUED GROWTH
In the past several years, we have transformed from an
early-stage clinical company with one indication to a late-stage
clinical development company with multiple indications. We remain
keenly focused on unlocking further shareholder value as we prepare
for the commercialization of voclosporin.
Voclosporin is a next-generation immunosuppressant compound that
has been extensively studied in over 2,600 subjects and aims to
address the significant unmet medical needs of patients suffering
from lupus nephritis (“LN”), focal segmental glomerulosclerosis
(“FSGS”), and dry eye syndrome (“DES”).
We continue to take a prudent and disciplined approach to
stewarding voclosporin through the Phase 3 AURORA clinical trial
for the treatment of LN and are targeting a commercial launch date
of early 2021.
Additionally, we are advancing voclosporin ophthalmic solution
(“VOS”), a topical formulation, for the treatment of DES, which
affects approximately 16 million people in the United States
alone1. Building upon the recently reported results for VOS, we are
actively preparing to launch Phase 2/3 clinical development by the
end of 2019.
Critical for a late-stage clinical development company
approaching commercialization, we have maintained a strong balance
sheet, with approximately $144.3 million USD as of March 31,
2019.
Our progress is creating long-term value for our shareholders.
Underscoring just how misleading ILJIN’s attacks on our performance
are, since Aurinia’s rebrand and public market listing in 2013, our
share price has performed well above the TSX and Nasdaq biotech
indices. Furthermore, Aurinia has delivered strong annualized total
shareholder returns relative to relevant indices and the broader
market.
Average Annualized Total Shareholder Returns
One-Year Three-Year Five-Year
Aurinia Pharmaceuticals Inc. (AUPH:US) 20.1% 40.9%
21.0% S&P/TSX Capped Health Care Index (^TTHC)
31.4% 8.6% 5.7% S&P/TSX Composite Index (^TSX)
0.7% 5.2% 2.0% NASDAQ Composite Index
(^COMPX:US) 2.9% 16.3% 12.8%
Today, we are transitioning through several important
milestones, and we expect our share price to ultimately reflect the
value we are creating for shareholders. Aurinia has strong forward
momentum and the right strategy in place to enhance value for all
shareholders.
AURINIA IS COMMITTED TO STRONG GOVERNANCE
We are committed to implementing robust governance practices
that best support long-term value creation for all our
shareholders. To this end, we have consistently pursued thoughtful
and responsible compensation practices that align our management’s
interests with those of our shareholders. Our Compensation
Committee consists entirely of independent Directors – including
Dr. Hyuek Joon Lee, ILJIN’s representative on our Board – and
undertakes a deliberate process involving well-established and
experienced outside consultants to develop compensation packages
that incentivize long-term value creation.
Contrary to ILJIN’s misleading claims, the salaries for our
named executive officers (“NEOs”) are generally in the bottom 25th
percentile of our 2019 compensation peer group. Furthermore, total
compensation packages (including bonuses and equity compensation)
for our NEOs are approximately at the 50th percentile of our peer
group.
Our continuous efforts to refresh our Board further reflect our
commitment to strong governance. Five of our eight Directors have
joined the Board since 2016, bringing fresh perspectives and
extensive experience in clinical development, regulatory
submissions, and commercialization, particularly in the United
States, where we will be making a regulatory submission. In
addition, six of our eight director nominees are independent.
Furthermore, we remain committed to continually evaluating
governance and Board composition as our Company evolves and as we
continue to engage our shareholders. We recently separated the CEO
and Chairman roles and are planning to introduce minimum equity
ownership requirements for Directors.
Additionally, as ILJIN is aware, the Board has already committed
to increasing gender diversity as part of its Director recruiting
efforts.
ILJIN’s continued focus on Dr. Glickman, who no longer serves as
CEO or a Director of Aurinia, is puzzling. As is common practice,
Aurinia asked Dr. Glickman to serve as a consultant to oversee the
transition of his role and to facilitate a seamless transition for
Peter Greenleaf when he assumed the role as Aurinia’s new CEO this
past April. The fact that Dr. Glickman holds this transitional role
in no way impedes the Board’s ability to act independently.
ILJIN HAS PRESENTED NO PLAN OR ACTIONABLE IDEAS
Despite our repeated attempts at constructive dialogue with
ILJIN, it has disclosed no alternative strategy for value creation.
Beyond advocating governance measures (many of which were already
underway at the Company – efforts that ILJIN was already well aware
of given its Board representation) ILJIN has offered no specific,
additive or constructive insights or ideas.
Instead of engaging us in good faith, ILJIN has decided to wage
a costly and unnecessary proxy contest. That ILJIN would distract
the Company at such a critical time, as we focus on
commercialization, is particularly troubling.
ILJIN’s NOMINEES LACK THE EXPERTISE AND QUALIFICATIONS THE
COMPANY NEEDS AT THIS CRITICAL TIME
While ILJIN concurs with our view that the Company’s shift to
commercialization should be our focus right now, the dissident’s
nominees have little-to-no experience in this area. This contrasts
sharply with our nominees, who have proven track records in the
successful commercialization of drugs.
Importantly, our Board includes biotechnology leaders who have
successfully led and transitioned their companies from therapy
concept to revenue generation. These are exactly the types of
directors we need to advance and successfully commercialize while
at the same time ensuring we remain well-capitalized and focused on
delivering shareholder value.
Peter Greenleaf, our new CEO, is an experienced biotech CEO and
Director who has taken therapies through to commercialization, all
the while creating significant shareholder value. He brings the
depth and breadth of experience we need to take Aurinia to its next
stage of development by continuing to grow and advance our
pipeline.
ILJIN nonetheless wishes to replace our highly qualified
Director nominees with its own hand-picked nominees. ILJIN has
failed to articulate how any of its nominees would benefit the
Company at this critical juncture and how they would provide the
commercialization expertise it agrees is needed on the Board.
Furthermore, ILJIN’s public communications around the proxy
contest demonstrate a lack of knowledge regarding how to run
successful trials and commercialize therapies. They question rising
expenses, but ignore the larger size of current trials, the need
for additional patient recruitment in the U.S. for FDA approval,
and the investment required in planning for commercialization for
swift launch following potential approval. It’s troubling that
ILJIN’s nominees did not inform ILJIN of these commercial
realities.
ILJIN HAS PRESENTED CONTINUOUSLY CHANGING DEMANDS WHILE
REJECTING AURINIA’S EFFORTS TO NEGOTIATE IN GOOD FAITH; ILJIN’S
MOTIVES ARE UNCLEAR
The Board has communicated consistently with and listened
carefully to ILJIN’s questions and feedback since ILJIN’s initial
investment in the Company. We regret that despite continual
negotiations to work toward a mutual agreement, they have resisted
and instead turned this into a public proxy battle. ILJIN’s demands
included:
- Ever-changing Director Nominees:
For example, since first reaching out to Aurinia on March 12, 2019
to propose potential Director nominees, ILJIN has amended its
proposed slate of Director nominees on no less than five separate
occasions, with the latest change occurring on June 3, 2019 in
ILJIN’s proxy circular of the same date.
- Unwillingness to Settle: Aurinia
has repeatedly attempted to negotiate with ILJIN in good faith. In
addition to numerous conference calls, in early May, mere days
after his appointment as our CEO, Peter Greenleaf spent two days
with ILJIN in South-Korea, with the specific intention of reaching
an agreement on the Board slate.
When looking at ILJIN’s pattern of ever-changing demands,
volatile negotiation tactics and unclear motives, we can only
assume that the activist is seeking to gain control of the Company
without a clear plan and without paying a premium to
shareholders.
Despite holding less than 15% of Aurinia’s outstanding shares,
and already having a representative on the Company’s Board in Dr.
Hyuek Joon Lee, the dissident is seeking three new Board seats.
This level of representation is hardly commensurate with ILJIN’s
holdings.
PROTECT THE VALUE OF YOUR INVESTMENT – VOTE THE YELLOW PROXY TODAY.
Aurinia’s success in rapid advancement of key therapies,
pipeline growth, and fundraising demonstrates the quality and
effectiveness of our Board. We have the right Board and management
team in place to lead Aurinia to its next stage of growth as we
approach commercialization.
Your vote is extremely important, regardless of how many shares
you own. Protect the value of your investment by voting the YELLOW
proxy today.
On behalf of the Special Committee of the Board of Directors of
Aurinia Pharmaceuticals Inc.,
(signed) “Peter Greenleaf”
Peter Greenleaf
Chief Executive Officer
(signed) “George Milne”
George Milne, Ph.D.
Chairman of the Board
About Aurinia
Aurinia Pharmaceuticals is a late clinical-stage
biopharmaceutical company focused on developing and commercializing
therapies to treat targeted patient populations that are impacted
by serious diseases with a high unmet medical need. The Company is
currently developing an investigational drug, for the treatment of
Lupus Nephritis, Focal Segmental Glomerulosclerosis and Dry Eye
Syndrome. The Company’s head office is in Victoria, British
Columbia and focuses its development efforts globally. For further
information, see our website at www.auriniapharma.com.
About Voclosporin
Voclosporin, an investigational drug, is a novel and potentially
best-in-class calcineurin inhibitor (“CNI”) with clinical data in
over 2,600 patients across indications. Voclosporin is an
immunosuppressant, with a synergistic and dual mechanism of action.
By inhibiting calcineurin, voclosporin blocks IL-2 expression and
T-cell mediated immune responses and stabilizes the podocyte in the
kidney. It has been shown to have a more predictable
pharmacokinetic and pharmacodynamic relationship (potentially
requires no therapeutic drug monitoring), an increase in potency
(vs cyclosporin), and an improved metabolic profile compared to
legacy CNIs. Aurinia anticipates that upon regulatory approval,
patent protection for voclosporin will be extended in the United
States and certain other major markets, including Europe and Japan,
until at least October 2027 under the Hatch-Waxman Act and
comparable laws in other countries and until April 2028 with
anticipated pediatric extension. Further, the new Notice of
Allowance is expected to result in the issuance of a U.S. patent
with a term extending to December 2037. If the FDA approves the use
of voclosporin for LN and the label for such use follows the dosing
protocol under the Notice of Allowance, the issuance of this patent
will expand the scope of intellectual property protection for
voclosporin to December 2037.
About VOS
Voclosporin ophthalmic solution (“VOS”) is an aqueous,
preservative free nanomicellar solution intended for use in the
treatment of DES. A Phase 2a study was recently completed with
results released in January of 2019. Previously, a Phase 1 study
with healthy volunteers and patients with DES was also completed as
were studies in rabbit and dog models. VOS has IP protection until
2031.
Forward-Looking Statements
Certain statements made in this press release may constitute
forward-looking information within the meaning of applicable
Canadian securities law and forward-looking statements within the
meaning of applicable United States securities law. These
forward-looking statements or information include but are not
limited to statements or information with respect to: Aurinia’s
anticipation that upon regulatory approval, patent protection for
voclosporin will be extended in the United States and certain other
major markets, including Europe and Japan, until at least October
2027 under the Hatch-Waxman Act and comparable laws in other
countries and until April 2028 with anticipated pediatric
extension; that the new Notice of Allowance is expected to result
in the issuance of a U.S. patent with a term extending to December
2037; that if the FDA approves the use of voclosporin for LN and
the label for such use follows the dosing protocol under the Notice
of Allowance, the issuance of this patent will expand the scope of
intellectual property protection for voclosporin to December
2037,Aurinia being well positioned for continued growth, Aurinia
preparing for the commercialization of voclosporin in early 2021,
the belief that adding ILJIN’s nominees would impede the
significant progress Aurinia has made in recent years and disrupt
Aurinia’s strong momentum as it approaches critical milestones,
Aurinia preparing to launch Phase 2/3 clinical development for VOS
by the end of 2019, that Aurinia’s progress is creating long-term
value for its shareholders, and the belief that Aurinia has strong
business momentum and the right strategy in place to enhance value
for all shareholders.
It is possible that such results or conclusions may change based
on further analyses of these data. Words such as “anticipate”,
“will”, “believe”, “estimate”, “expect”, “intend”, “target”,
“plan”, “goals”, “objectives”, “may” and other similar words and
expressions, identify forward-looking statements. We have made
numerous assumptions about the forward-looking statements and
information contained herein, including among other things,
assumptions about: Aurinia being able to extend and protect its
patents on terms acceptable to Aurinia, Aurinia successfully
completing its clinical trials, Aurinia receiving regulatory
approval on terms acceptable to Aurinia, and Aurinia having
sufficient funds on hand to complete its trials and operations as
currently planned.
Even though the management of Aurinia believes that the
assumptions made, and the expectations represented by such
statements or information are reasonable, there can be no assurance
that the forward-looking information will prove to be accurate.
Forward-looking information by their nature are based on
assumptions and involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of Aurinia to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking information. Should one or more of these risks and
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described
in forward-looking statements or information. Such risks,
uncertainties and other factors include, among others, the
following: Aurinia not being able to extend or fully protect its
patent portfolio for voclosporin, Aurinia not obtaining necessary
regulatory approval, negative results from clinical trials, and
cash outlays being higher than currently planned.
Although we have attempted to identify factors that would cause
actual actions, events or results to differ materially from those
described in forward-looking statements and information, there may
be other factors that cause actual results, performances,
achievements or events to not be as anticipated, estimated or
intended. Also, many of the factors are beyond our control. There
can be no assurance that forward-looking statements or information
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, you should not place undue reliance on forward-looking
statements or information.
Except as required by law, Aurinia will not update
forward-looking information. All forward-looking information
contained in this press release is qualified by this cautionary
statement. Additional information related to Aurinia, including a
detailed list of the risks and uncertainties affecting Aurinia and
its business can be found in Aurinia’s most recent Annual
Information Form available by accessing the Canadian Securities
Administrators’ System for Electronic Document Analysis and
Retrieval (SEDAR) website at www.sedar.com or the U.S. Securities
and Exchange Commission’s Electronic Document Gathering and
Retrieval System (EDGAR) website at www.sec.gov/edgar.
We seek Safe Harbor
1 https://www.ncbi.nlm.nih.gov/pubmed/28705660
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190607005166/en/
Company Contact:Glenn Schulman, PharmD, MPHCorporate
Communicationsgschulman@auriniapharma.com
Shareholder Questions or Requests for Voting
Assistance:Laurel Hill Advisory GroupNorth American Toll Free:
1-877-452-7184Collect Calls Outside North
America:1-416-304-0211Email: assistance@laurelhill.com
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