- Medison issues open letter to Knight shareholders, detailing strong momentum for change created by its campaign to end conflicts of interest and revitalize Knight’s strategy
- If Medison nominees do not achieve majority Board representation, Medison believes nothing meaningful will change at Knight
- Medison remains committed to ongoing engagement with shareholders to bring necessary change to Knight, including at very next opportunity
- Medison pledges to pursue its Diamond strategy in Canada independently
PETACH TIKVA, Israel, May 3, 2019 – 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 issued the following open letter regarding the strong momentum for change it has created through its campaign. Further it detailed its intention if its nominees are unable to achieve Board representation with the ability to effect meaningful change, including pledging to pursue a Diamond strategy in Canada through a new company, independent of Knight.
The full text of the letter to Knight shareholders is included below:
Dear Fellow Shareholders,
I am writing to you as we approach the proxy voting deadline for this year’s annual and special meeting of shareholders of Knight Therapeutics, in order to share with you my thoughts about our campaign to bring a New Day For Knight.
Our campaign is a great victory for all Knight shareholders – we already created a strong change in wind…
Three months into the election process, during which we invested substantial time and resources and met with most of the largest shareholders of Knight across Canada and the United States, I’d like to share with you that our first mission has been completed in a very successful manner. Through our advocacy, we have created a dynamic that has led to the beginnings of real change for the better:
1. Jonathan Goodman has started to listen and engage with shareholders. After we publicly raised our concerns, shareholders engaged directly with Jonathan Goodman. We understand that a during a number of these discussions, shareholders expressed their extreme disappointment and were very critical of management and the incumbent board. Jonathan Goodman can no longer claim that his shareholders are happy. We, Cambridge/CI and many other shareholders who expressed their concerns both publicly and privately are certainly unhappy.
2. Jonathan Goodman has admitted that the “invest in funds” strategy is a colossal failure. As a direct result of our campaign, Jonathan Goodman has now publicly acknowledged Knight’s failure to realize any strategic value from Knight’s $138M commitment to venture capital funds. It took Jonathan Goodman and the company four years to admit that these investments were an expensive mistake and to cease making further additional investments of this nature. Jonathan Goodman is finally openly and honestly admitting this colossal failure as a direct result of our campaign.
3. Jonathan Goodman has begun to refresh Knight’s board. As a direct result of our campaign, Knight has nominated Michael Tremblay, a seasoned executive with substantial pharma experience, to the board. Michael Tremblay, who is independent from Knight, Jonathan Goodman and the Goodman family, has very similar background to our nominees. In our opinion it is too little and too late, but the addition of Michael Tremblay to Knight’s board is exactly what we were hoping for.
4. Jonathan Goodman can no longer act upon or ignore his conflicts of interest. Our campaign revealed the truth about Jonathan Goodman’s interest in his competing family business (Pharmascience) to all Knight shareholders. Jonathan Goodman publicly admitted to these conflicts of interest by placing his interest in Pharmascience in a “blind trust.” This action was only taken by Jonathan Goodman as a result of our campaign, though it does nothing to resolve the conflicts of interest. All shareholders now have an eye on Jonathan Goodman’s actions and are mindful of his economic misalignment. As a result, many of Knight’s institutional investors are voting FOR our proposed enhanced governance by-law, which was also backed by Glass Lewis, that will force Jonathan Goodman to remove these conflicts or resign as CEO.
5. Knight has committed to distribute excess cash. As a direct result of our campaign, Knight has acknowledged that it sits on excess cash and has adopted our share buyback plan, almost word for word.
I would like to remind all of you why we started this campaign.
In the last three and a half years, since Medison became the second largest shareholder of Knight, I have become aware of numerous and serious flaws in Knight’s leadership and operational focus, which ultimately exposed the fact that Knight has no coherent business strategy. It has failed to build its pharma business and it suffers from untenable and unprecedented conflicts of interest. There can be no doubt that Knight’s governance has had a direct influence on the poor performance of the company and its stock price.
Today’s stock price incorporates the market’s judgment about Knight’s business prospects: there is almost no value in the stock for anything other than cash and financial assets. Put differently, investors do not assign any value to the ability of Jonathan Goodman and management to generate returns from the company’s assets.
As a concerned shareholder and a pioneer in establishing pharma operations, I decided to step up and do whatever I could to convince Jonathan Goodman to change course before going public with our proxy contest, but to no avail.
As many of you know, Jonathan Goodman is a good person, but is also extremely stubborn. With respect to Knight, he has shown that he is not ready to listen to any idea that is not his own. He is simply not open to constructive feedback even if this feedback would benefit all of the shareholders he claims to represent. Only six months ago, Jim Gale and Jonathan Goodman told me that there is not a single shareholder who is unhappy with their investment in Knight, something that we have learned during this process is very far from the truth.
Our campaign has received tremendous support from shareholders.
This week I attended the Bloom Burton & Co. Healthcare Investor Conference in Toronto. I was approached by many Knight shareholders who congratulated me for the positive impact our campaign has already had and expressed their gratitude for our efforts in “rocking the boat” at Knight.
Both ISS and Glass Lewis, the two largest independent proxy advisory firms, recognized the need for new directors at Knight and the serious issues with the current business and conflicts of interest.
BUT, the achievements and wins created directly by our campaign are just a start and could easily be lost if they are not supported by additional measures. I believe that real and long-term change can only be achieved by replacing a majority of the board. Adding one, two or three of our nominees to Knight’s board could be perceived as a great outcome for a typical activist investor. But we are neither typical nor activist.
In light of this, I have decided that I will NOT serve on Knight’s board unless we have the majority required to influence the future direction of our company or we have adequate assurances that Knight would pursue the “diamonds” strategy and remove the conflicts of interest. I also believe that most of our nominees will not serve on the board as part of a minority after Jonathan Goodman attacked their competence and their character.
Short of replacing a majority of the board, the only way for shareholders to be 100% certain that the company would engage in the new “diamonds” strategy is if Jonathan Goodman were to set up structural assurances and guarantees to ensure the execution of such new strategy and remove conflicts. We believe that this is very unlikely. This Tuesday I heard Jonathan Goodman in his public address to the conference continue to support his failed strategy and continue to support Jim Gale as an “independent” chairman.
Therefore, my fellow shareholders, I urge you to ensure that necessary changes are implemented at Knight, either by supporting the replacement of a majority of the board or by demanding that Jonathan Goodman give sufficient assurances that he will aggressively pursue our proposed “diamonds” strategy and eliminate the conflicts of interest.
Finally, if shareholders choose to continue with Knight’s current management, board and strategy, I will not forego the great opportunity of our proposed “diamonds” strategy. In this event, I will recommend to Medison’s board of directors that Medison pursue this strategy in Canada independently of Knight.
Of course, as a major shareholder in Knight, I continue to hope that Knight succeeds. But, if it instead continues to falter, I will continue to work to bring necessary change to the board at the very next opportunity. Knowing Knight’s board, I believe I can be more effective operating from the outside as an active shareholder. Should this be the case, we will maintain an open dialogue with all Knight shareholders and continue to highlight key findings and perspectives as appropriate, including updates through our website, www.NewDayforKnight.com
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 firstname.lastname@example.org.
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.
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