- Management director nominees bring superior experience and
expertise to drive positive growth, represent ALL shareholders
interests and create value for ALL shareholders.
- Dissident shareholders are attempting to muddy the waters by
providing misleading and ambiguous communications to
shareholders.
- Dissident shareholders have NO plan for the Company and seek
control via nomination of a conflicted and inexperienced slate of
directors, while also attempting to "borrow" management director
nominees.
- Rick Santorum, Former US Senator from Pennsylvania and
Former US Presidential Candidate has agreed to be the independent
chair of the Meeting.
- Shareholders urged to vote FOR management director nominees
using only the BLUE proxy well in advance of the May 12, 2021, 9:00
a.m. EDT deadline.
- Contact the Company's proxy solicitor, Gryphon Advisors Inc.
at 1-833-490-0586 or by email at inquiries@gryphonadvisors.ca for
more information or assistance voting the BLUE Proxy.
FSD Pharma Inc. (Nasdaq:HUGE) (CSE:HUGE) (the "Company" or "FSD
Pharma") wishes to alert you to the events that have occurred since
the Company filed its Management Information Circular (the
"Circular") and the accompanying letter to shareholders related to
the Annual & Special Meeting of shareholders scheduled for May
14, 2021, copies of which are available under the Company's SEDAR
profile. On April 26, 2021, certain dissident shareholders issued
an information circular which included misleading statements and
baseless accusations towards the Company's management. In response,
the Company issued the following letter to shareholders:
Dear fellow FSD Pharma Shareholder,
You recently received an alert from us that your investment in
FSD Pharma Inc. ("FSD Pharma" or the "Company") is at
a crossroad. The continuing self-serving actions by Anthony
Durkacz, Zeeshan Saeed and the other dissident shareholders
(collectively, the "Dissidents") highlight how dire the
situation has become for the shareholders of the Company (the
"Shareholders").
At the upcoming Annual and Special Meeting (the
"Meeting") of Shareholders, it will be up to you to
determine the best path forward. FSD Pharma recommends that
Shareholders protect their interests and support value creation by
voting FOR the director nominees proposed by management of
the Company (the "Management Director Nominees") and all
resolutions, using only the BLUE proxy. The Company is also pleased to
announce that Rick Santorum, the former US Senator from
Pennsylvania, and former US Presidential Candidate has agreed to be
the independent chair of the Meeting. Sen. Santorum served as a
United States Senator from Pennsylvania from 1995 to 2007. Sen.
Santorum holds a BA from Pennsylvania State University, an MBA from
the University of Pittsburgh and a J.D. degree with honors from
Dickinson School of Law.
The current strategy continues to build positive momentum and
offers a number of avenues to significant value creation for
ALL Shareholders. Your Company
is pursuing multiple applications of its lead compound, FSD-201
ultra-micronized palmitoylethanolamide ("PEA") and is also
actively exploring other merger and acquisition (“M&A”)
and licensing opportunities that could expand the drug development
pipeline and generate new opportunities to create significant value
for Shareholders. In fact, FSD Pharma has a letter of intent in
place to acquire a controlling interest in a late stage asset that
is expected to receive approval for commercialization from the FDA
either in Q4 2021 or Q1 2022 – if we can just get beyond the
distractions and cost of this proxy contest. There is positive
operating momentum inside, and exciting opportunities for growth
outside, your Company. Shareholders can learn more at
www.fsdfuture.com.
At the same time, the Management Director Nominees are taking
action to strengthen shareholder democracy by proposing to collapse
the Company's dual-share structure, comprising of class A multiple
voting shares (the "Class A Shares") and class B subordinate
voting shares (the "Class B Shares"). FSD Pharma’s 72 Class
A Shares are controlled by Dissidents Mr. Anthony Durkacz and Mr.
Zeeshan Saeed, and Management Director Nominee, Dr. Raza Bokhari,
the current Executive Chairman & CEO. These three individuals,
who collectively exercise voting power of 19,919,520 Class B
Shares, have a disproportionate advantage in determining the future
of the Company over the holders of Class B Shares who have invested
money into the Company. The Management Director Nominees, led by
Dr. Raza Bokhari, a Class A Shareholder, seek your support to
eliminate the Class A Shares, and in doing so, strengthen
Shareholders' voting power at no cost to Shareholders. This would
result in – among many other benefits – each Shareholder receiving
a voting interest that is proportionate to their equity ownership
interest. One share will equal one vote.
The Dissidents, Deliberately Sowed Confusion
in their April 26th 2021 Circular, by Including Two Management
Director Nominees –
Mr. Donal Carroll and Mr. Frank Lavelle
along with the Dissident Director Nominees, Without Their Consent
or Prior Knowledge.
Mr. Donal Carroll is the Chief Financial Officer of the Company,
and it is extremely irresponsible and reckless on the part of the
Dissidents to leverage him to create confusion and attempt to
falsely signal to Shareholders that a senior executive of the
Company is supportive of the Dissidents.
To preserve and protect the integrity of the management team and
smooth functioning of the Company, FSD Pharma is replacing Donal
Carroll as a Management Director Nominee with Shahzad Shah, an
experienced executive and former Chief Operating Officer of FV
Pharma, a subsidiary of the Company. Details regarding Mr. Shah's
background and experience are set out below. Further information is
included in an amendment to the Company's Management Information
Circular, copies of which will be mailed to Shareholders and filed
under the Company's SEDAR profile.
Shahzad Shah, Chief Operating Officer
of FV Pharma, Management Director Nominee
Mr. Shah is a talented and seasoned
executive with over 28 years of executive leadership experience
working for public and private corporations in North America. Mr.
Shah brings a wealth of experience with particular strengths in
areas such as building results-oriented teams that have turned
around existing companies, assembled teams that have launched
successful companies in North America, planned both financial and
operational strategies and was part of the Leadership Team that
crafted and executed strategy for a $2 billion organization.
In Mr. Shah's various executive roles, he
has managed and driven continuous improvement initiatives for multi
facility divisions across North America introducing Lean
Methodologies and sharing best practices. Mr. Shah has directly
managed various companies from $23 Million to over $110 Million in
revenue. Mr. Shah was also responsible for overseeing continuous
improvement initiatives for a $500 Million revenue
organization.
Mr. Shah is the founder and Managing
Partner of Lean Excellence Canada, a consulting and training firm.
The firm offers a large range of training services, as well as
training and implementation of Lean Methodologies in various
organizations throughout Canada and the USA. Lean Excellence Canada
has provided consulting services through a large array of
industries including manufacturing, distribution, transportation,
pharmaceutical companies, among many others.
Mr. Shah received his Engineering degree,
Human Resource Management degree and Masters of Business
Administration, from Queen’s University and Master Lean Six Sigma
Black Belt from York University. Mr. Shah is currently in final
phase of receiving his designation of Certified Management
Consultant.
Mr. Frank Lavelle, a veteran senior healthcare executive, in
condemning this irresponsible action of the Dissidents, declared it
to be deceitful. Mr. Lavelle has presented a sworn Affidavit before
the Superior Court of Ontario that he has only agreed to serve as a
Director, if elected by the shareholders along with the Management
Director Nominees. Mr. Lavelle is demanding that the Dissidents
amend and re-circulate their circular with his name erased.
The Dissidents’ Flailing Actions Expose
Their Focus on Maintaining Disproportionate Voting Power and
Enriching Themselves at the Expense of Shareholders
The Dissidents have other plans for your Company. As is all too
common in proxy contests, they are trying to replace facts with
grandstanding and rhetoric, seeking to muddy the waters with
irrelevant, incomplete and misleading narratives that attempt to
distract Shareholders from considering their true intentions for
the Company.
To cite but one example of the games the Dissidents are playing
with the truth, let’s set the record straight on compensation. The
fact of the matter is that my annual cash compensation is ONE
dollar. The assertion that I have received $24M compensation from
2018 to 2020 and $5.7M in 2021 is misleading. I received grants of
stock options and Class B securities, as non cash compensation
since 2018. None of the stock options granted or class B securities
have been cashed out by me. Generally Accepted Accounting
Principles (GAAP) require disclosure of non-cash compensation and
assign a dollar value at the time of the award. For me to realize
$24M through exercising stock options, the stock price must be
north of $60. In addition, unlike Mr. Durkacz and Mr. Saeed, I have
invested $2 million of my own money into the Company. How much of
their own money have they invested? Actions speak louder than
words.
However, Mr. Durkacz and the Dissidents’ own words and actions
expose what they really believe about shareholder democracy, their
lack of qualifications as Director Nominees, and what Shareholders
can expect should they secure control of your Company:
Mr. Durkacz and Mr. Saeed Believe Their Votes Matter
More Than Yours
In a classic case of “do as I say, not as I do,” the Dissidents
claim they support the rights of the Company’s Shareholders, yet
they quietly plan to abstain from voting the proxies they receive from Shareholders for
the resolution to collapse the Company’s dual-share structure.
They have refused to disclose how they
plan to vote their shares of the Company.
You can only assume they will vote against
the resolution thereby defeating it and perpetuating their control,
which is totally disproportionate to their economic
interest. This means that
the Dissidents do not recommend
that Shareholders vote to collapse the Company’s dual-share
structure, Shareholders who deliver blank proxies to them will not
be voting on this matter at all, thus eliminating your voice and
what's worse they might vote against the resolution despite their
abstaining on your behalf. A failure to pass this important
resolution would result in Dissidents Mr. Durkacz and Mr. Saeed
continuing to exercise disproportionate voting power over all
holders of the Company’s Class B Shares. Apparently for the
Dissidents, the principle of one share equals one vote is only for
other Shareholders, not for Mr. Durkacz and Mr. Saeed. Rather than
explain their blatant indifference to Shareholder interests, the
Dissidents have buried their plan to abstain on page 20 of their
information circular. We think that your Company’s Directors should
believe in shareholder democracy, and back that up with action, as
Dr. Bokhari and the Management Director Nominees have.
Mr. Durkacz Supported the Board and Management Strategy Until
He Was Caught Trying to Enrich Himself.
In November 2020, Mr. Durkacz and Mr. Saeed voted in favour of
making Dr. Bokhari the Executive Chairman of the Company’s Board.
Shortly thereafter, Mr. Durkacz made a presentation to the Board
regarding a self-serving plan to pull the Company backwards by
acquiring a start-up notionally in the psychedelics sector that has
no track record, cash, or research and development activities (the
"Start-Up"). At that time, Mr. Durkacz failed to properly
disclose his financial interests in the Start-Up. (Mr. Durkacz
argued that a single sentence at the end of the presentation simply
stating that “First Capital is also a shareholder of [the
Start-Up]” was enough disclosure for the Board, despite the fact
that he failed to state the actual amount of the interest held
through First Capital. He only recently disclosed the actual
amount, because he was forced to.
Mr. Durkacz also stated, among other things, that he supports
the Board and Management’s actions:
“Micro Caps must pivot to
survive. FSD has done this already with current management changing
the direction to biotech and it was the right thing to do for the
company to survive and raise more capital.”
Anthony Durkacz, Presentation to the
Board of Directors, November 16, 2020
Unfortunately for Mr. Durkacz in that same presentation he also
admitted that he is ill-suited to operate and one can infer,
evaluate biotech companies:
“I can’t help our team with
operations of a biotech company, but I can help our team get the
investor attention and valuation that it deserves”
Anthony Durkacz, Presentation to the
Board of Directors, November 16, 2020
Following Mr. Durkacz’s presentation, Management explored Mr.
Durkacz’s proposal, met with the leader of the Start-Up, and
recommended to the Board that the Company should follow the
progress of the Start-Up (in which Durkacz has an ownership
position) but not proceed with a transaction at that time.
Despite his own admission that he was ill-equipped to evaluate
companies in the biotech space, Mr. Durkacz was enraged by this
decision, and sent an email to his fellow Directors attacking their
independent judgment and threatening to “commence a claim against
those rogues” and “immediately vote to remove them from the Board
in a very public manner.” In the same email, Mr. Durkacz threatened
to “pursue actions against those individuals.” This is exactly what
he and his fellow Dissidents are attempting to do.
The Dissidents Feel So Strongly About the Qualifications of
Their Nominees That They Attempt to “Borrow” Two of the Management
Director Nominees
After admitting to the Board of Directors that he “can't help,”
Mr. Durkacz and the Dissidents attempt to defend their
qualifications to serve as Directors in their latest communication.
They do this in spite of significant independence, conflict of
interest and competency concerns with the Dissident Director
Nominees. Incredibly in the same document, they recommend that
Shareholders support two Management Director Nominees: Donal
Carroll, who is no longer standing for election at the Meeting (as
discussed below) and Frank Lavelle. This is dumfounding for a
couple of key reasons:
- Dissidents who believe that they have a strong and qualified
slate of Director Nominees do not attempt to “borrow” actual
credible and qualified nominees from the Management Slate; and
- Neither of the two Management Director Nominees were contacted
by the Dissidents to confirm their willingness or seek their
consent to serve on a Dissident-controlled board. The Dissident
circular clearly suggests the contrary in an attempt to confuse and
mislead Shareholders previously.
It can be reasonably said that the best laid plans made by
individuals confident in the abilities of their slate do not
involve adding Director Nominees at the eleventh hour, let alone
those on the other side of a proxy contest which they initiated
against the Company. Perhaps if the Dissident Nominees were more
qualified, or had any applicable operating experience, they
wouldn’t have felt a need to take this bizarre step. This may also
offer Shareholders an explanation as to why the Dissidents’ plan is
heavy on rhetoric and light on details.
If the Dissidents Win, Shareholders Could Lose Twice
Proxy contests can cost millions of dollars. The Dissidents have
foisted an expensive and distracting proxy contest on the Company
and its Shareholders and have engaged expensive legal and proxy
advisors. Now for the first time, buried on page 24 of their recent
communication, the Dissidents state that they “may seek
reimbursement from FSD for out-of-pocket expenses, including proxy
solicitation expenses and legal fees, incurred in connection with
the Meeting…” In plain English, this means that if the Dissidents
are successful in seizing control of your Company, Shareholders
should expect that the Dissidents could seek to recover their costs
from the Company, essentially forcing Shareholders to pay for both
sides of this costly and unnecessary proxy contest.
What’s Old is New Again – Mr. Durkacz’s Ability to Win While
Shareholders Lose
This is far from the first time that Anthony Durkacz has
attempted to win at the expense of the interests of shareholders.
An article from Seeking Alpha authored by White Diamond Research
from January 25, 2019 noted the following about Mr. Durkacz – who
by that time had already developed quite a track record. Among
other concerning excerpts, the article stated:
“Durkacz had an average loss of 92% over 11
stocks in which he had involvement;
“Durkacz has received an astounding sum of
over C$28.7 million total current value in cash and warrants for
being both a director and broker for FSD… First Republic Capital
collected massive fees for raising money for FSD Pharma. Anthony
Durkacz controls and is a shareholder for First Republic. The
amount of payments and warrants his company has received have been
egregious, in our opinion; and
FSD Pharma has made Durkacz a very wealthy
man before the company has accomplished anything or made any
profits.”1
It should by crystal clear why Mr. Durkacz and the Dissidents
are fighting so hard to maintain the dual-class share structure
that gives them disproportionate voting power. Don’t let them muddy
the waters and take control of YOUR Company (without paying a
premium) while enriching themselves at Shareholders’ expense.
Vote FOR the Management Director Nominees
and Resolutions on the BLUE Proxy
Today
As Shareholders you control the Company's future and will
determine if the positive momentum continues, so it is essential
that you vote FOR all Management Director Nominees and all
resolutions in the Circular, using only the BLUE proxy. Time is of the essence. To ensure
that your vote is counted at the Meeting, please vote immediately
and no later than 9:00 a.m. (Toronto/New York time) on May 12,
2021. For questions or assistance in voting your proxy, please
contact the Company's proxy solicitation agent, Gryphon Advisors
Inc. by telephone at 1.833.292.5847 toll-free in North America
(1.416.902.5565 by collect call) or by email at
inquiries@gryphonadvisors.ca. For up-to-date information and
convenience in voting, please visit www.fsdfuture.com.
I thank you for your continued support as we take the right path
forward to value creation for ALL Shareholders. Time is short, so I ask you
to vote using only the BLUE
proxy today to protect your interests in FSD Pharma.
Sincerely,
(signed) "Raza Bokhari"
Dr. Raza Bokhari Chief Executive Officer & Executive
Chairman
About FSD Pharma
FSD Pharma Inc. (www.fsdpharma.com) is a publicly-traded holding
company.
FSD BioSciences, Inc., a wholly-owned subsidiary, is a specialty
biotech pharmaceutical R&D company focused on developing over
time multiple applications of its lead compound, ultra-micro PEA by
down-regulating the cytokines to effectuate an anti-inflammatory
response.
The Company filed an IND with the FDA on August 28, 2020 and was
approved on September 25, 2020 to initiate a phase 2 clinical trial
for the use of FSD201 to treat COVID-19, the disease caused by the
SARS-CoV-2 virus. The trial is currently underway and is expected
to randomize 352 patients in a controlled, double-blind multicenter
study.
Severe COVID-19 is characterized by an over-exuberant
inflammatory response that may lead to a cytokine storm and
ultimately death. The Company is focused on developing ultra-micro
PEA for its anti-inflammatory properties to avoid the cytokine
storm associated with acute lung injury in hospitalized COVID-19
patients.
The Company is not making any express or implied claim that its
product has the ability to eliminate, cure or contain the COVID-19
(or SARS-2 Coronavirus) infection at this time.
Forward-Looking Statements
Neither the Canadian Securities Exchange nor its regulation
services provider accept responsibility for the adequacy or
accuracy of this press release.
Certain statements contained in this press release constitute
"forward-looking information" and "forward-looking statements"
within the meaning of applicable Canadian and U.S. securities laws
(collectively, "Forward-Looking Information"). Forward-Looking
Information includes, but is not limited to, information with
respect to FSD Pharma’s strategy, plans or future financial or
operating performance, the solicitation of proxies and voting in
respect of the Meeting, the Dissidents, the intentions of the
Dissidents or the Dissident Director Nominees, the impact of the
Dissident Director Nominees or the Management Director Nominees, if
elected, on the financial condition, operations, business and
strategies of the Company and its shareholder value, future plans
or prospects of the Company, receipt of any FDA or other regulatory
approvals, the completion of any trials regarding the use of
FSD-201 to treat COVID-19 or to treat canine and feline
gastro-intestinal diseases, the safety of FSD-201 or whether
FSD-201 may be effective in treating COVID-19 or to treat canine
and feline gastro-intestinal diseases. The use of words such as
"budget", "intend", "anticipate", "believe", "expect", "plan",
"forecast", "future", "target", "project", "capacity", "could",
"should", "focus", "proposed", "scheduled", "outlook", "potential",
"estimate" and other similar words, and similar expressions and
statements relating to matters that are not historical facts, or
statements that certain events or conditions "may" or "will" occur,
are intended to identify
Forward-Looking Information is based on FSD Pharma’s current
beliefs or assumptions as to the outcome and timing of such future
events. Such beliefs or assumptions necessarily involve known and
unknown risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in such
Forward-Looking Information. Certain of these risks and
uncertainties are described in the Circular and the Company’s
continuous disclosure filings available under the Company’s SEDAR
profile at www.sedar.com and under the Company’s EDGAR profile at
www.sec.gov. Forward-Looking Information is not a guarantee of
performance. The Forward-Looking Information contained in this
press release is made as of the date hereof, and FSD Pharma is not
obligated to update or revise any Forward- Looking Information,
whether as a result of new information, future events or otherwise,
except as required by law. Because of the risks, uncertainties and
assumptions contained herein, investors should not place undue
reliance on Forward Looking-Information. The foregoing statements
expressly qualify any Forward-Looking Information contained
herein.
For up to date information and convenience in voting please
visit www.fsdfuture.com.
1
https://seekingalpha.com/article/4234882-fsd-pharma-rollup-scattered-uneconomical-cannabis-investments-50minus-70-downside
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210503005322/en/
Shareholder Contacts:
Gryphon Advisors Inc. 1.833.292.5847 toll-free in North America
(1.416.902.5565 by collect call) inquiries@gryphonadvisors.ca
Donal Carroll, Chief Financial Officer, FSD Pharma Inc.
dcarroll@fsdpharma.com
Media Contact:
Joel Shaffer Longview Communications and Public Affairs
jshaffer@longviewcomms.ca
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