- Knight is a failure, with a floundering share price and minimal progress at building an operating business
- Apparently unable to respond to Medison’s criticisms on the merits, Knight has wasted corporate assets and harassed Medison with spurious litigation, demanded thousands of documents, and has mounted a dishonest and hypocritical proxy campaign defense
- Medison urges Knight shareholders to remain focused on the fact that Knight’s stock has produced no returns for shareholders for more than three years and implies little or no value for Knight’s operating business
- Medison encourages shareholders to vote for five new independent nominees, in addition to Meir Jakobsohn, to bring objective oversight and an actionable strategic plan
PETACH TIKVA, Israel, April 10, 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 responded to Knight’s continuing campaign of misinformation and hypocrisy. Medison is the second largest owner of Knight and has the greatest paid-in capital to Knight among all investors.
Medison has announced that it intends to nominate six exceptional pharmaceutical industry leaders (the “Nominees”) for election to Knight’s Board of Directors (the “Board”) at the Company’s 2019 annual and special meeting (the “Meeting”). Medison encourages all Knight shareholders to vote for implementation of a winning strategy and improved governance by electing the Nominees, who have extensive industry experience and a commitment to overseeing Knight for the benefit of all shareholders.
“It is deeply troubling that Knight and its conflicted Chairman and Directors are misleading investors,” said Meir Jakobsohn, CEO of Medison. “The recent presentation from Knight attempts to obscure the Company’s failures with a series of disingenuous charts and analyses. There is no avoiding the market’s verdict about Knight, however: every day the stock trades and every day investors conclude that the operating business at Knight – and the prospects for the operating business – are worth close to nothing. At least 97% of the value of Knight’s stock merely reflects the cash and other financial assets on Knight’s balance sheet.”
“Knight shareholders have lost confidence in Knight’s future for three reasons. First, in five years, the Company has failed to build an operating business with meaningful recurring sales and net profits from operations. The Company generated just $12 million in revenue last year and has just 0.05% market share. Second, since 2017, Knight’s CEO has had an untenable conflict of interest because his family’s pharmaceutical business has moved directly into competition with Knight. His attempts to rewrite that story (claiming the competition has always existed or that he pays no attention to his own economic self-interest) are clearly falling on deaf ears. Third, shareholders now realize that the Chairman (with whom the CEO does business) and the directors are not providing objective oversight. Witness, for example, that the CEO has said he will refuse to work for any other board the shareholders may put in place. Why is the CEO afraid of objective oversight?” added Jakobsohn.
Instead of committing to fix its ailing business and governance structure, Knight has been attempting to divert attention through false and misleading claims. Medison noted some examples of the blatant misrepresentations made by Knight in its campaign:
|Knight’s False Claim||The Truth|
|“Knight has ‘first-in-class’ governance”||Knight’s Chairman and Board members are riddled with conflicts of interest and close relationships|
Knight’s Board approved a loan to a venture fund that is run by Knight’s Chairman and in which the CEO has an economic interest
Every member of the Board has a close relationship with the CEO – financial or personal – outside of Knight
Apparently fearing independent oversight, Knight’s CEO has said he will not work for a Board other than his own, handpicked one
Knight shareholders are invited to see the full extent of these conflicts of interest represented in a single chart in Medison’s Circular or at www.NewDayForKnight.com
“Jonathan Goodman has |
always competed against Pharmascience” “There is nothing new about the ‘conflict’”
|Pharmascience was not a competitor of Knight until 2017, when Pharmascience changed its business plan and began to sell and license specialty pharma products. Accordingly, in March 2017 Knight acknowledged in its Financial Statements for the first time that Pharmascience became a competitor|
For years, Mr. Goodman correctly said publicly that Knight was not a competitor with Pharmascience. Now Mr. Goodman claims he has always competed against his family’s business. He has changed his story to try to comfort shareholders.
Mr. Goodman’s prior business Paladin was owned and effectively controlled by the Goodman family, not just Jonathan Goodman; Paladin and Pharmascience essentially operated as two business arms of the family, not competing with each other; accordingly, Paladin never listed Pharmascience as a competitor in its public disclosures
|“Mr. Goodman has been a fierce competitor of Pharmascience”|| Since deciding to enter the innovative pharmaceutical business in 2017, Pharmascience has successfully licensed multiple products that Knight should have explored to license. Meanwhile, Knight has licensed products with very low potential, with the exception of one innovative product that was introduced by Medison |
There are innumerable related-party transactions between Knight and Pharmascience that are inconsistent with these organisations being “fierce” competitors
Knight conducted its AGM at Pharmascience’s office every year since Knight’s inception; it silently changed the location of the upcoming Meeting only a few weeks ago after Mr. Goodman’s conflicts of interest became public
|“Shareholders do not need to be concerned with Mr. Goodman’s conflict because he enjoys competing against his own economic interests (i.e., his significant interest in Pharmascience)”||This is an absurd claim on its face; CEOs are human beings, expected to act in their own and shareholders’ economic interest|
No other public company CEO (that we know of) in the world owns more of a competitor than he or she owns of the company he or she is managing
This misalignment of interest is indefensible as a matter of corporate governance
|“The blind voting trust … [is a] further demonstration of Mr. Goodman’s singular focus on the success of Knight”||Mr. Goodman has essentially admitted that there is a problem with his ownership of a direct competitor |
Despite the so-called “blind trust” Mr. Goodman’s is well aware that he owns more of Pharmascience than Knight; there is nothing “blind” about his interests
Mr. Goodman’s economic interest in Pharmascience has not changed and he still benefits from all the profits that Pharmascience will generate at the expense of Knight and its shareholders
|“Knight has generated $220 million of net income”||60% of Knight’s profits since inception are attributable to a one-time disposal of an asset it received in its 2014 spin-off from Paladin. The rest of the profits are from non-strategic, one-time loans and interest on the large cash balance|
Knight’s operating business has lost money every quarter since inception and only generated $12 million of revenue in 2018
The simple fact is that Knight’s operating business is small and unprofitable
|“[Meir Jakobsohn] can gamble with your cash, to place risky bets on licensing early-stage pharmaceuticals”||Knight has fabricated this claim entirely; it is based completely on misinformation |
Medison’s plan for Knight was published and made available to all shareholders. Medison suggested that Knight in-license innovative, late-stage / approved products with limited to no clinical risk
By way of comparison, over the past three years, Medison signed agreements with 12 new global partners for 15 innovative products, out of which 12 were FDA/EMA approved at the time of signing and the other 3 were approved since then. Several of these products are expected to generate more sales in Israel than the entire Knight portfolio of products in Canada
|“Medison is failing in its own business”||Medison is extremely profitable and is growing; it has distributed $55 million in dividends since it became a partner of Knight |
Medison’s revenue grew more than 20% in 2018 to over $250 million, more than 20 times Knight’s revenues in 2018; Medison generated more than $21 million of after-tax net income in 2018
Medison generates sufficient cash from its own operations to fund continued strong growth. It has no need for additional cash
|“Medison is seeking to control Knight”||Medison has nominated only one Medison executive for election to Knight’s Board|
In addition to Mr. Jakobsohn, Medison has nominated five exceptional operating executives from the pharmaceutical industry to objectively and independently oversee KnightThe Medison nominees have the skills and global experience to help Knight realize its vision and create shareholder value in the near and long-term
|“[Meir Jakobsohn] has conflict of interest due to his controlling stake in Medison”||Medison is not a competitor of Knight; Medison is a partner of Knight|
The intention of the partnership was that Knight would help secure products for Medison in Israel as part of its rest of the world strategy; to date, no such licensing rights were secured
Knight could have benefitted from Medison’s extensive network of biotech companies that produce innovative, cutting edge drugs and their global commercialization partners, but Knight has chosen not to avail itself of Medison’s relationships
“Our sole interest is to bring accountability and proper governance to Knight’s Board in order for the Company to realize its fullest potential for all of its owners. We trust shareholders to see through the false and misleading statements made by the Company and support our extremely qualified and truly independent nominees.”
Medison encourages shareholders to read its Information Circular, available at www.NewDayForKnight.com for the complete, truthful story about Knight’s failure to create value for shareholders and the best way forward.
Medison has engaged Olshan Frome Wolosky LLP and Goodmans LLP as legal advisors.
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 one 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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