Glass Lewis Report Highlights the Conflicts Rampant in Knight’s Board, Administration and the Goodman Household
Report Additionally Discusses the Failed Technique and Underperformance at Knight and Recommends Implementing Medison’s Plan
Glass Lewis Additionally Recommends Jonathan Goodman Divest of his Pharmascience Stake or Resign as CEO and for Shareholders Vote FOR Medison’s Proposed “No Battle” Bylaw
PETACH TIKVA, Israel — Medison Biotech (1995) Ltd. (“Medison”), which along with its associates owns greater than 10.four million shares or 7.3% of Knight Therapeutics, Inc. (TSX:GUD) (“Knight” or the “Firm”), in the present day introduced that Glass Lewis & Co., LLC, a number one impartial proxy advisory agency, has famous the underperformance of Knight, extreme conflicts of curiosity among the many administrators, administration and the Goodman household and the necessity for change to the Knight Board of Administrators. Glass Lewis recommends that shareholders vote for change through the use of the GOLD proxy card and vote FOR the election of Medison nominees Michael Cloutier and Bob Oliver.
Institutional Shareholder Providers (“ISS”) has additionally just lately advisable Knight shareholders help change and vote utilizing the GOLD proxy card to elect Elaine Campbell and Christophe Robert Jean.
Commenting on the report, Medison mentioned, “The Glass Lewis report exposes the severity of the problems at Knight – inferior returns, lack of an working enterprise, a failed technique, conflicted administrators and a marketing campaign to attempt to idiot shareholders. The impartial report additionally calls on Jonathan Goodman to divest his conflicted holdings or resign instantly as CEO. As well as, Knight’s Chairman, James Gale, is uncovered for associated occasion transactions and conflicts of curiosity.”
Added Medison, “We’re very happy that shareholders are lastly in a position to see, intimately, the problems with this board, however to even have the chance to vote for brand new, expert administrators which have an actual plan to create worth for all. This is a crucial time for Knight and we urge shareholders to vote FOR all the Medison nominees on the GOLD proxy in the present day.”
In its suggestion, Glass Lewis said:*
- “Finally, giving full consideration to the components mentioned above, the whole thing of the supplies launched by the Firm and the Dissident, and our engagement conferences with the principal events and buyers, we’re of the opinion that Knight’s public shareholders can be greatest served by supporting Medison’s marketing campaign for board change.”
- “In our view, this motion is justified because of the mixture of a number of components:
(i) Knight’s poor absolute and relative efficiency over the past three years,
(ii) the shortage of great progress within the final 5 years towards constructing a long-lasting specialty pharmaceutical enterprise of scale and worth (the rationale shareholders invested in Knight within the first place),
(iii) the unwillingness or incapacity of administration and the board to deploy the numerous capital that the Firm has raised from shareholders (even when that requires modifications to the technique or a rise in threat tolerance with a view to adapt to the present surroundings), or else to return capital,
(iv) a number of governance considerations, most notably with respect to the CEO’s battle of curiosity as a result of his bigger financial stake within the household enterprise which just lately grew to become a direct competitor of Knight, and
(v) the present board’s rigidness, defensive posture and usually dismissive tone with respect to taking motion to deal with what we contemplate to be legitimate and severe considerations, which in our opinion are prone to proceed to impair the Firm’s skill to maximise worth for shareholders if they aren’t resolved.”
In its report, Glass Lewis mentioned the severity of the Goodman household battle:
- “Along with Medison’s criticisms of Knight’s enterprise technique and efficiency, the Dissident’s marketing campaign has introduced renewed consideration to a number of company governance points at Knight, on the board degree and within the govt suite. Chief amongst them is what seems to be a severe battle of curiosity for Knight’s CEO, Jonathan Goodman.”
- “The brand new actuality that Mr. Goodman has a a lot bigger financial curiosity in a competitor than he does in Knight got here as a regarding revelation to some Knight shareholders we spoke with. Their newfound concern is totally comprehensible, in our view.”
- “The Firm now argues that shareholders have lengthy recognized about this challenge and that nothing has actually modified, regardless of the [recent] developments…. [W]e discover his newest clarification far much less believable or comforting.”
- “Given the stark variations between previous and present circumstances, we don’t agree with the Firm’s and the board’s said place that nothing has modified with respect to Mr. Goodman’s battle of curiosity.”
- “…Pharmascience’s latest transfer into Knight’s main space of focus, along with the latest disclosure of the dimensions of Mr. Goodman’s financial curiosity, has made this a completely totally different scenario than it was 20 years in the past at Paladin, and even 5 years in the past when Knight was based. The implications for Knight’s shareholders shouldn’t be dismissed or taken flippantly, in our opinion.”
- “Subsequently, as Medison argues, we imagine it’s affordable and justified for shareholders to demand that Mr. Goodman divest his stake in Pharmascience with a view to stay the CEO of Knight. Alternatively, we imagine it could be acceptable from a company governance perspective for Mr. Goodman to relinquish the function of CEO of Knight, however to stay on the board the place his battle can be extra manageable and fewer prone to impression day-to-day operations or execution of Knight’s strategic priorities.”
- “[W]e notice that whereas Knight has justified its low degree of deal exercise in recent times by pointing to excessive valuations within the specialty pharmaceutical market, the timing of Pharmascience’s entry into Knight’s market section raises questions as as to if this has additionally made Mr. Goodman much more reluctant to pursue potential acquisition targets as of late.”
- “Finally, putting Mr. Goodman’s stake right into a blind belief merely doesn’t handle the problem as a result of, as Medison factors out, even with out managerial or voting management over Pharmascience, he is aware of Pharmascience is broadening its scope and actions into Knight’s market and that his stake in Pharmascience is price way more than his stake in Knight.”
- “[W]e see solely two methods for Knight to totally handle the problem: he ought to divest his Pharmascience stake or resign as CEO of Knight, which we once more make clear doesn’t essentially imply he has to resign from the board of Knight.”
- “Moreover, the board of administrators, which has a fiduciary responsibility to characterize the pursuits of all shareholders, together with by addressing any severe conflicts of curiosity of its executives and administrators, particularly the founder and CEO, is finally liable for holding Mr. Goodman accountable on this challenge, by forcing one end result or the opposite. So far, the board has not proven a willingness to step up on this regard.”
In its report, Glass Lewis highlighted the lack of independence on the Knight Board:
- “The board’s unwillingness to carry Mr. Goodman accountable for Knight’s latest efficiency, or to meaningfully handle his important battle of curiosity, is probably going the results of the long-standing private and enterprise ties Mr. Goodman has with a number of members of the board, together with the chairman, Mr. Gale, who additionally chairs the company governance and nomination committee, and the opposite two members of that committee, who’ve served on the board for 5 years.”
- “One of many larger considerations, in our view, is that the chairman doesn’t seem like totally impartial …. Particularly, Mr. Gale’s funding administration enterprise, Signet, has partnered with the Goodman household, together with Jonathan and different members, in funding different pharmaceutical firms and serving on the boards of these firms.”
In its report, Glass Lewis highlighted the next on Knight’s shareholder returns:
- “…over the past one, two and three years, Knight’s shareholder returns haven’t solely been flat or destructive, however they’ve usually considerably underperformed the common returns of each peer teams and all three indexes included in our evaluation, save for just a few durations the place Knight’s efficiency was, at greatest, according to sure of those benchmarks.”
- “We imagine our evaluation additional helps the Dissident’s foremost rivalry that, slightly than constructing a specialty pharmaceutical enterprise over the past 5 years, Knight has raised a whole bunch of thousands and thousands in capital and engaged primarily in funding and lending actions to generate earnings and returns, constructing solely a small working enterprise that has declined considerably in worth over the past three years, as measured by Knight’s share worth ex-cash/investments.”
- “[T]he implied market worth of Knight’s working enterprise has declined by greater than 80% over the past two years, whereas two of the Canadian pharmaceutical friends we chosen noticed the market values of their enterprise skyrocket greater than 300% and 1,400%”
- “All instructed, our TSR, adjusted market worth and enterprise worth analyses lend broad help for the Dissident’s critique and central thesis that, after 5 years, Knight has not executed its said technique of deploying capital to construct a number one specialty pharmaceutical firm in Canada and worldwide markets with a view to ship wholesome returns for its shareholders.”
- “Additional, we imagine the Dissident’s share worth evaluation and our analyses refute the board’s declare that Knight has outperformed Canadian pharmaceutical and world specialty pharmaceutical friends, significantly over the past one, two and three years.”
In its report, Glass Lewis highlighted the next on Knight’s failed technique:
- Knight has didn’t execute its strategic plan, and arguably has made little progress towards its said mission. …[T]he Firm has generated scant revenues so far and working losses each quarter, specializing in what the Dissident considers to be non-innovative, low-economic-value merchandise, whereas additionally appearing like a monetary intermediately by partaking in non-strategic, illiquid and dangerous lending and enterprise investing actions.”
- “In the previous couple of years, Knight’s lending program and enterprise investing haven’t merely been supplementary, however as an alternative have accounted for the majority of the Firm’s exercise. We doubt that that is what shareholders, together with CI Investments, purchased into after they invested in Knight.”
- “Shareholders invested in Knight primarily as a result of Paladin’s monitor file in executing such a technique and the expectation that Knight would replicate that success, however that has not been the case 5 years in at Knight.”
- “Knight additionally states that analysts and shareholders have expressed ‘overwhelming help’ for Knight’s disciplined technique, and that shareholders have expressed privately the identical supportive views because the analysts who observe the Firm. But, the one shareholder who has expressed its views publicly, CI Investments, has endorsed Medison’s different technique and director slate.”
In its report, Glass Lewis highlighted the next on Medison’s “Diamond” technique:
- “In our opinion, Medison’s different plan appears to deal with the capital allocation and strategic points which have prevented Knight from constructing a significant pharmaceutical enterprise within the final 5 years and from delivering ample returns for shareholders.”
- “Maybe crucial distinction between the 2 plans: Medison and its nominees appear intent on really deploying Knight’s important money steadiness to generate returns and worth for shareholders, and to return extra capital again to shareholders.”
Medison encourages shareholders to view new profiles of its director nominees and browse its Data Round at www.NewDayForKnight.com for the entire, truthful story about Knight’s failure to create worth for shareholders, Medison’s extremely certified and impartial nominees, and one of the simplest ways ahead for Knight and its shareholders.
TIME IS OF THE ESSENCE
VOTE ONLY GOLD TODAY
If in case you have any questions and/or want help finishing your GOLD type of proxy or VIF, please name Shorecrest at 1-888-637-5789 (toll-free) or 647-931-7454 (acquire calls accepted), or e-mail [email protected].
*Permission to make use of quotations neither sought nor obtained.
Medison is among the world’s largest industrial companions of main world biotech firms. Backed by three generations of expertise within the healthcare business since 1937, Medison is uniquely certified to supply the entire spectrum of built-in companies for worldwide firms trying to enter or develop their presence in Israeli and chosen ROW markets. Through the years, Medison has turn out to be the companion of selection for biotech firms that produce extremely modern, leading edge therapeutics for commercialization within the Israeli market and is presently the second largest pharmaceutical firm in Israel, with over CAD 250 million in revenues yearly and over 270 workers. Medison runs a company enterprise arm with a devoted analysis and analysis group boasting deep scientific and industrial backgrounds. Medison additionally operates a scouting program to cater to its companions and is an energetic investor in life science initiatives round drug improvement and digital well being.
Extra data may be discovered at www.medison.co.il.
Ahead Wanting Assertion
This information launch incorporates forward-looking statements and forward-looking data inside the which means of relevant securities legal guidelines, together with, with out limitation, Medison’s and Knight’s respective priorities, plans and methods. All statements and knowledge, apart from statements of historic reality, included herein are forward-looking statements, together with, with out limitation, statements relating to actions, occasions or developments that Medison expects or anticipates could happen sooner or later. These forward-looking statements may be recognized by means of forward-looking phrases akin to “could”, “will”, “count on”, “intend”, “plan”, “estimate”, “anticipate”, “imagine” or “proceed” or related phrases and expressions or the destructive thereof. There may be no assurance that the plans, intentions or expectations upon which these forward-looking statements are primarily based will happen or, even when they do happen, will outcome within the efficiency, occasions or outcomes anticipated. We warning readers to not place undue reliance on forward-looking statements contained herein, which aren’t a assure of efficiency, occasions or outcomes and are topic to quite a few dangers, uncertainties and different components that would trigger precise efficiency, occasions or outcomes to vary materially from these expressed or implied by such forward-looking statements. These components embody: modifications in Knight’s methods, plans or prospects; common financial, business, enterprise, regulatory and market situations; actions of Knight and its opponents; situations within the pharmaceutical business; dangers regarding authorities regulation and modifications thereto, together with in respect of the laws regarding board composition, proxy solicitation and shareholder conferences; the state of the financial system together with common financial situations globally and financial situations within the jurisdictions during which Knight operates; the unpredictability and volatility of Knight’s share worth; and dilution and future gross sales of securities of the Firm. These components shouldn’t be construed as exhaustive. Sure forward-looking statements contained herein could also be thought of to be future-oriented monetary data or a monetary outlook for the needs of relevant Canadian securities legal guidelines. Future oriented monetary data and monetary outlook contained herein about potential monetary efficiency, monetary place or money flows are primarily based on assumptions about future occasions, together with financial situations and proposed programs of motion, primarily based on the relevant administration group’s evaluation of the related data obtainable to them on the relevant time, and to turn out to be obtainable sooner or later. Particularly, the knowledge incorporates projected operational data for future durations that are primarily based on quite a few materials assumptions and components. The precise outcomes of the relevant operations for any interval might differ from the quantities set forth in these projections, and such variations could also be materials. Additional, there isn’t a assurance or assure with respect to the costs at which any securities of Knight will commerce, and such securities could not commerce at costs that could be implied herein. See above for a dialogue of the dangers that would trigger precise outcomes to differ from such forward-looking statements. Readers are cautioned that every one forward-looking statements contain recognized and unknown dangers and uncertainties, together with these dangers and uncertainties detailed within the steady disclosure and different filings of Knight, copies of which can be found on the System for Digital Doc Evaluation (“SEDAR”) at www.sedar.com. We urge you to fastidiously contemplate these dangers and uncertainties. The forward-looking statements contained herein are expressly certified of their entirety by this cautionary assertion. Except expressly said in any other case, the forward-looking statements included herein are made as of the date of this information launch and Medison disclaims any obligation to publicly replace such forward-looking statements, besides as required by relevant legislation.