ALPHARETTA, Ga., June 17, 2019 /PRNewswire/ -- Velan Capital, L.P.
(together with the other participants in its solicitation, "Velan"
or "we"), one of the largest stockholders of Progenics
Pharmaceuticals, Inc. ("Progenics" or the "Company")(NASDAQ:PGNX),
comprised of successful specialty pharmaceutical operators and
financial services experts, today issued the following statement
responding to certain misleading claims made by the Progenics Board
of Directors (the "Board").
On June 13, 2019, the Board
delivered a second letter to "fellow shareholder[s]" touting a
commitment "to enhancing the value of [their] investment." Due to
the Board's apparent desire to preserve the status quo and distract
stockholders from the issues plaguing the Company – where minimal
stock ownership in the boardroom, lackluster operational
performance, endless stockholder dilution and hefty compensation
are all acceptable under the current regime – the Board has elected
to engage in a campaign of misinformation and scare tactics. Velan
is here to set the record straight.
The Board's
Misleading Statement
|
Perspective of
True Stockholder
|
"Dear Fellow
Shareholder"
|
Non-executive
directors collectively own only ~0.06% of Progenics common stock
with Peter Crowley and Michael Kishbauch owning ZERO shares of
Progenics common stocki
The Board added
insult to injury to "fellow shareholder[s]" with its decision to
dilute stockholders in June 2019 by making a milestone payment in
stock when it could have done so with cash
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"…Velan Capital,
L.P., an investment firm, is attempting to derail our significant
progress and ultimately gain control of your Board."
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Velan, a true fellow
shareholder, is aligned with all stockholders – we will only make
money if the value of our investment appreciates. We are not
seeking control of the Board, rather we are seeking accountability
for years of underperformance
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"The Progenics Board
and management team continue to make significant progress toward
enhancing the value of your investment. We are working tirelessly
to advance our pipeline and make a difference in the lives of
patients."
|
The Board directed a
failed 1404 Phase 3 trial and sat idle for more than SIX YEARS
before beginning its MIP-1095 Phase 2 program in June 2019, after
Velan's public involvement. Furthermore, AZEDRA was acquired in
2013 with the majority of its pivotal trial patients already
recruited…it was not approved until July 2018
It took more than
TEN YEARS of Mr. Crowley's tenure and TEN MONTHS from AZEDRA's FDA
approval for the Company to treat ONE cancer patient
Progenics' stock
price has declined over nearly every relevant period against both
absolute and relative metrics. While the Board is oblivious, true
stockholders have felt the lack of progress under the incumbent
Board
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"Since FDA approval
of AZEDRA, Progenics has mastered this complex commercialization
process"
|
The Board deemed
AZEDRA "commercialization ready" in 2017. In the words of CEO Mark
Baker at the time AZEDRA was approved, "radiopharmaceuticals,
it's like baking bread, right?" The management team further
stated that facility readiness, payor engagement and patient
onboarding should take "a matter of weeks" – clearly these
"masters" did not understand the complexities of AZEDRA's launch,
with cancer patients waiting more than TEN MONTHS to be
dosed
Compare this to two
other cancer radiotherapeutics, XOFIGO and LUTATHERA, with
patient dosing occurring in the same quarters as their
respective FDA approvals
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"Both of these
accomplishments [FDA approval and first commercial sale of AZEDRA]
created excellent value for you, our fellow
shareholders."
|
Since AZEDRA's FDA
approval in July 2018, the Company's stock has declined
51%ii
When the Company
finally dosed an AZEDRA patient, the Board elected to pay a
commercial milestone payment issuing over 1.6 million shares of
common stock instead of using its ample cash balance, even though
its stock price was a depressed ~$4.20 per share
What tangible
"excellent value" can the Board identify that has benefitted
stockholders?
|
"Novartis has
invested many billions of dollars to acquire assets in the prostate
cancer and neuroendocrine tumor radiopharmaceutical spaces that are
quite similar to Progenics' products."
|
Novartis bought two
of the Company's competitors while the Progenics Board sat idle for
SIX YEARS. Had the Board moved quickly on AZEDRA and MIP-1095,
Progenics may have already been acquired for as much as a 17x
return (which is what Endocyte, Inc. generated for its
stockholders in approximately one year)
It is likely not a
coincidence that Novartis chose to invest in assets managed or
overseen by others rather than those under the direction (or lack
thereof) of this Board
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"Our three directors
targeted by Velan bring indispensable experience, which is critical
to the Company's continued success"
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Although Mr. Baker
deserves to be targeted, Velan has only recommended stockholders
vote against two directors, Messrs. Crowley and
Kishbauch
Under the direction
of Chairman Crowley, the Company's stock price has declined
46%.iii As a supposed financier, Mr. Crowley has
mercilessly directed excess stockholder dilution to the tune of
$200+ million in equity and approved outsized compensation for
missed and unambitious corporate goals (which could be because he
does not own any shares of common stock)
During Mr. Crowley's
tenure as Chairman, Mr. Baker was promoted to CEO and the Board has
failed to provide proper oversight and direction needed given that
Mr. Baker's prior corporate operational experience consisted of
tenures in the ferry and grain industries. The Board should have
used its "indispensable experience" to guide Mr. Baker rather than
permitting value destruction and missed opportunities to
persist
Mr. Kishbauch has
served as a director of three other public companies in the past
ten years whose stock prices declined by 76% (Achillion
Pharmaceuticals), 88% (Catabasis Pharmaceuticals) and 97%
(TetraLogic Pharmaceuticals), respectively, during his tenure. In
addition, OraPharma, the company he founded, was sold for $7.41 per
share while its IPO price was $18.00 per share, nearly a 60%
decline. The Board's letter purposefully omitted this fact,
instead highlighting a "63 percent premium" to a depressed stock
price
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"Mr. Kishbauch is
Chair of the Nominating and Corporate Governance Committee. In this
role, he has continued his track record of espousing best-in-class
governance practices and welcoming shareholder input"
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While Mr. Kishbauch
has served as Chair of the Nominating and Governance Committee, the
Board has opposed initiatives to expand stockholder rights and
deprived stockholders of the opportunity to elect representatives
of their choosing, including by (i)
recommending against
a stockholder proposal in 2018 to expand proxy access (a proposal
ISS supported) and (ii) invalidating Velan's nomination of
candidates
Velan's attempts to
engage with the Company were rebuffed until we nominated a slate of
directors…how is that "welcoming shareholder input?"
|
Your vote at the 2019 Annual Meeting, scheduled to be held on
July 11, 2019, should reflect your
view on the performance of the Board, particularly Messrs. Crowley
and Kishbauch, whom we believe are most responsible for the lack of
accountability and poor corporate governance practices at
Progenics, as Chairman of the Board and Chairman of the Nominating
and Corporate Governance Committee, respectively, and together who
represent the sole members of the Compensation Committee.
The Board touts the independent nature of six of its directors –
we agree Messrs. Crowley and Kishbauch are independent…of
stockholders given their complete lack of ownership of common
stock. We believe there is a clear misalignment of interests
between Messrs. Crowley and Kishbauch and the Company's
stockholders – the true owners of Progenics.
Under the direction of Messrs. Crowley and Kishbauch, the
Company has destroyed significant stockholder value, squandered its
pipeline potential and failed the needs of cancer patients. If
meaningful change does not occur, stockholder value will continue
to be destroyed and cancer patients will continue to be neglected.
We urge stockholders to follow our call to action by voting
AGAINST the re-election of Messrs. Crowley and
Kishbauch on the GREEN proxy card.
It is time for accountability and stockholder alignment at
Progenics – Velan urges all stockholders to vote on the
GREEN proxy card today!
Investor contacts:
Deepak Sarpangal
(415) 677-7050
campaign@velancapital.com
www.savePGNX.com
Okapi Partners LLC
Pat McHugh / Jason Alexander
(212) 297-0720
info@okapipartners.com
i Excludes shares underlying exercisable options
held by non-executive directors.
ii Calculated from July 30,
2018 to June 14, 2019.
iii Calculated from February
4, 2009 to June 14, 2019.
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SOURCE Velan Capital, L.P.