- Failures at Knight have been exposed by multiple, independent
third parties
- Change can only be assured if all Medison nominees are
elected
- Conflicts, related-party transactions and an on-going failure
to create value for shareholders must come to an end
- Medison also calls on Knight shareholders to vote FOR Medison's
proposed Enhanced Governance Bylaw to strengthen governance and
eliminate current conflicts among Board and CEO
PETACH TIKVA, Israel,
April 29, 2019 /CNW/ - Medison
Biotech (1995) Ltd. ("Medison"), which together with its
affiliates owns more than 10.4 million shares or 7.3% of Knight
Therapeutics, Inc. (TSX:GUD) ("Knight" or the
"Company"), today publicly issued a letter to its fellow
Knight shareholders, calling on them to vote FOR the entire
Medison slate of highly qualified directors on the GOLD
proxy card, before this Thursday's deadline for the 2019 annual and
special meeting.
Explaining why electing anything but the full slate would be
insufficient to effect meaningful change, Meir Jakobsohn, CEO of
Medison, said, "All shareholders must send a clear and unequivocal
message that we want Knight to move forward with discipline and
urgency – putting idle cash to work to create value for
shareholders and adopting a proven business plan that will create a
growing and profitable company."
Added Jakobsohn, "This Board must change drastically if
shareholders are to see meaningful change in the business or stock
price. We have nominated an exceptional, independent group of
highly skilled candidates ready to move Knight forward
immediately. We ask all shareholders that have not yet voted
to join us and the other shareholders that have committed to
electing all of the Medison directors. It can be a new day
for Knight if we all take action today."
The full text of the letter to Knight shareholders is included
below:
Dear Fellow Knight Therapeutics Shareholder:
Medison Biotech (1995) Ltd. and its affiliates ("Medison") are
the second largest shareholder of Knight Therapeutics, Inc.
("Knight"). Knight's annual and special shareholder meeting is fast
approaching, and we ask you to consider carefully your vote this
year. The deadline for voting is this Thursday.
Knight Has Failed to Execute Its Business Plan
As you know by now, Knight has failed to build the business it
promised to build, choosing instead to sit on a large stockpile of
cash. As Knight's progress has floundered, the value attributed to
its operations and business prospects has faded dramatically: the
stock price now reflects less than $0.30 per share for the business itself, down
more than 90% from just a few years ago.
Shareholders must take action to fix the lack of progress
in building a business.
Knight Suffers from Serious and Fundamental Governance
Issues
Knight is run by an executive and Board who have serious –
perhaps even unprecedented – conflicts of interest. We know of no
other business anywhere in the world in which the CEO owns more
stock in a leading competitor than he owns in the business he is
running. And Knight's "independent" Chairman is anything but: he is
a business partner with the CEO, a service provider to the CEO's
family and a business partner of a leading competitor. Together,
the CEO and Chairman have approved transactions involving lending
money to themselves, friends and related parties. No one on the
current Board is truly independent.
Shareholders must take action to fix the retrograde
governance and lack of independence.
Widespread Support for a Meaningful Change at Knight
We are not alone in our belief. The two leading independent
proxy vote advisory services – ISS and Glass Lewis – have written
lengthy, in-depth analyses of Knight, after hearing from both the
Company and us. Both ISS and Glass Lewis are supportive of
substantial and meaningful change in Knight's Board composition and
governance:
- Glass Lewis: "[W]e are of the opinion that Knight's
public shareholders would be best served by supporting Medison's
campaign for board change."
- ISS: "It appears that a more independent and less
conflicted board may be needed for the company to adjust its
course..."
A leading Canadian corporate governance expert, Professor
Richard Leblanc, wrote that he had
never seen so many conflicts of interest and governance issues in
his twenty-five years of advising Canadian and global businesses on
these matters. Underscoring the failures at Knight, Professor
Leblanc had no fewer than 54 recommendations for improved
governance and shareholder protections at Knight.
Knight's third largest shareholder, Cambridge Global Asset
Management (CI), a $20 billion
investment advisor and long-standing Knight stockholder, told
Bloomberg that they too support change at Knight and will vote with
us. Based on our conversations with numerous other shareholders, we
are confident that many more are going to support the need for a
meaningful change at Knight.
Shareholders must come together to support substantial
change in Knight's Board and governance.
The Path Forward – Medison Offers a Promising Strategy that
Simply Makes Sense
Knight's lack of execution and governance are severe, in our
opinion, and inhibit Knight's ability to ever create value for
shareholders. As we have described in two extensive presentations
(available at www.NewDayForKnight.com), the Company's business plan
lacks vision and credibility. More concerning, based on our
extensive experience building successful pharma companies, Knight's
current strategy is suboptimal and is highly unlikely to create
substantial operating profits or shareholder returns.
Our vision and plan for Knight – described in detail during this
campaign – is the best path to creating a differentiated, growing
and profitable Knight. As Glass Lewis said:
"In our opinion, Medison's alternative plan seems to address the
capital allocation and strategic issues that have prevented Knight
from building a meaningful pharmaceutical business in the last five
years and from delivering adequate returns for shareholders."
Shareholders must take action to set Knight on a path
forward to build a profitable business.
The Incumbents Resist Any Change and Use Desperate Tactics to
Preserve a Status Quo of Underperformance
As the Financial Post opined, the only people who do not seem to
be in favor of change are the incumbent directors themselves: "like
most shareholders, Jakobsohn got bored with the 'lack of action' at
Knight."
Indeed, the incumbent Board has taken extraordinary steps to
resist change at Knight. They sued Medison to prevent it from using
its own money to protect its investment in Knight. They have taken
every chance they have to "shoot the messenger" with false and
misleading statements about Medison's successful business. (For
example, contrary to Knight's allegations about Medison's
profitability and dividends, Medison has in fact paid more than
$100 million in dividends from its
operating profits to shareholders in the last five years alone.)
And they have distorted history, claiming that recently
acknowledged competitors like Pharmascience have been longstanding
ones; that directors with whom the CEO has had a decades-long
business relationship are "new" and "fresh" and "independent"; and
that product licenses were obtained from a completely failed
strategy to invest in venture capital funds.
Knight's CEO has gone so far as to suggest that he would refuse
to continue in his position if the shareholders change the Board.
Glass Lewis fully understands the gravity of such a threat:
"…such a threat only raises our concern that management's
current strategic plan is not defensible on the merits alone, and
that the CEO is not working for or willing to be held accountable
by anyone but himself (or his long-standing business
partners)."
These extreme tactics and disingenuous claims demonstrate the
lengths to which Knight's incumbents will go to preserve their
absolute control and power over Knight.
The incumbents have seemingly convinced themselves that all is
well at Knight, that a stagnant stock price and $12 million of annual revenue generating
consistent operating losses are to be touted as successful and
making progress, when they are clearly not. And they want
shareholders to be quiet and patient. For decades more.
Shareholders must take action to install a Board that acts
in their own interests, not its own.
If Shareholders Want Change, They Need a Complete Winning Team;
Half Measures Will Not be Effective
We have heard from enough of our fellow shareholders privately –
and from ISS, Glass Lewis, Professor Leblanc, Cambridge Asset
Management and the Financial Post publicly – to know that patience
and decades of waiting is not what shareholders want.
The question for shareholders then is: how can we get Knight on
a successful path, with energetic execution of a promising business
plan?
We do not believe adding one or two new directors, on a Board of
eight that includes mostly friends and business associates of the
CEO, will be enough. If shareholders only support modest
Board change, they can expect less than a modest change at
Knight.
Based on prior history, we fear Knight's CEO will simply quash
debate, sue his opponents, plot with his friends and continue down
his chosen path. That is what this campaign has taught us.
Instead of modest steps, we urge you to support
meaningful change.
We shareholders must send a clear and unequivocal message that
we want Knight to move with discipline and urgency – putting its
idle cash to work to create value for shareholders and adopting a
proven business plan that will create a differentiated, growing and
profitable company. Meaningful changes will not occur if one or two
or even three new directors are added to Knight's recalcitrant
Board. Knight and its shareholders need meaningful Board
change to create meaningful change in its strategy, business and
operating results.
It is time for shareholders to elect a highly qualified,
winning team, with a proven business plan and a mandate to execute
it, to the Knight Board.
Half measures and half teams are not sufficient to drive change
or build successful, profitable businesses. Send in a full
team.
I urge you to vote using the GOLD card for our entire winning
team. It is time for a New Day for Knight.
Sincerely,
Meir Jakobsohn
Medison also urged Knight shareholders to vote FOR
Medison's proposed Enhanced Governance Bylaw on the
GOLD proxy card. The bylaw would enshrine common-sense
governance principles, which have been flagrantly violated by
Knight's current CEO and Board, including that Knight executives
not hold, directly or indirectly, a material financial interest in
a business that competes with the Company, and that the Board
chairperson not have any material financial, economic or business
relationships with any officer of the Company.
In recommending that shareholders vote for the Enhanced
Governance Bylaw, independent proxy advisory service Glass
Lewis notes, "… we believe it's reasonable and justified for
shareholders to demand that Mr. Goodman divest his stake in [Knight
competitor] Pharmascience in order to remain the CEO of
Knight."
Medison encourages shareholders to view profiles of its director
nominees and read its Information Circular
at www.NewDayForKnight.com for the complete, accurate
story about Knight's failure to create value for shareholders,
Medison's highly qualified and independent nominees, and the best
path forward for Knight and its shareholders.
TIME IS OF THE ESSENCE
VOTE ONLY GOLD TODAY
If you have any questions and/or need assistance completing your
GOLD form of proxy or VIF, please call Shorecrest at
1-888-637-5789 (toll-free) or 647-931-7454 (collect calls
accepted), or e-mail contact@shorecrestgroup.com.
About Medison
Medison is one of the world's largest commercial partners of
leading global biotech companies. Backed by three generations of
experience in the healthcare industry since 1937, Medison is
uniquely qualified to provide the complete spectrum of integrated
services for international companies looking to enter or expand
their presence in Israeli and selected ROW markets. Over the years,
Medison has become the partner of choice for biotech companies that
produce highly innovative, cutting edge therapeutics for
commercialization in the Israeli market and is currently the second
largest pharmaceutical company in Israel, with over CAD
250 million in revenues annually and over 270
employees. Medison runs a corporate venture arm with a
dedicated research and evaluation team boasting deep scientific and
commercial backgrounds. Medison also operates a scouting program to
cater to its partners and is an active investor in life science
projects around drug development and digital health.
Additional information can be found
at www.medison.co.il.
Forward Looking Statement
This news release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws, including, without limitation, Medison's and
Knight's respective priorities, plans and strategies. All
statements and information, other than statements of historical
fact, included herein are forward-looking statements, including,
without limitation, statements regarding activities, events or
developments that Medison expects or anticipates may occur in the
future. These forward-looking statements can be identified by the
use of forward-looking words such as "may", "will", "expect",
"intend", "plan", "estimate", "anticipate", "believe" or "continue"
or similar words and expressions or the negative thereof. There can
be no assurance that the plans, intentions or expectations upon
which these forward-looking statements are based will occur or,
even if they do occur, will result in the performance, events or
results expected. We caution readers not to place undue reliance on
forward-looking statements contained herein, which are not a
guarantee of performance, events or results and are subject to a
number of risks, uncertainties and other factors that could cause
actual performance, events or results to differ materially from
those expressed or implied by such forward-looking statements.
These factors include: changes in Knight's strategies, plans or
prospects; general economic, industry, business, regulatory and
market conditions; actions of Knight and its competitors;
conditions in the pharmaceutical industry; risks relating to
government regulation and changes thereto, including in respect of
the regulations concerning board composition, proxy solicitation
and shareholder meetings; the state of the economy including
general economic conditions globally and economic conditions in the
jurisdictions in which Knight operates; the unpredictability and
volatility of Knight's share price; and dilution and future sales
of securities of the Company. These factors should not be construed
as exhaustive. Certain forward-looking statements contained herein
may be considered to be future-oriented financial information or a
financial outlook for the purposes of applicable Canadian
securities laws. Future oriented financial information and
financial outlook contained herein about prospective financial
performance, financial position or cash flows are based on
assumptions about future events, including economic conditions and
proposed courses of action, based on the applicable management
team's assessment of the relevant information available to them at
the applicable time, and to become available in the future. In
particular, the information contains projected operational
information for future periods which are based on a number of
material assumptions and factors. The actual results of the
applicable operations for any period could vary from the amounts
set forth in these projections, and such variations may be
material. Further, there is no assurance or guarantee with respect
to the prices at which any securities of Knight will trade, and
such securities may not trade at prices that may be implied herein.
See above for a discussion of the risks that could cause actual
results to vary from such forward-looking statements. Readers are
cautioned that all forward-looking statements involve known and
unknown risks and uncertainties, including those risks and
uncertainties detailed in the continuous disclosure and other
filings of Knight, copies of which are available on the System for
Electronic Document Analysis ("SEDAR") at www.sedar.com. We urge
you to carefully consider those risks and uncertainties. The
forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement. Unless expressly
stated otherwise, the forward-looking statements included herein
are made as of the date of this news release and Medison disclaims
any obligation to publicly update such forward-looking statements,
except as required by applicable law.
SOURCE Medison Biotech Ltd.