- Additional Proxy Soliciting Materials (definitive) (DEFA14A)
24 March 2011 - 6:00AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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CPEX Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Investor Contacts:
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Press Contacts:
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Bob Hebert
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Andrew Cole/Chris Kittredge
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Chief Financial Officer
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Sard Verbinnen & Co
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CPEX Pharmaceuticals, Inc.
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212.687.8080
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603.658.6100
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Amy Bilbija
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MacKenzie Partners
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212.929.5500
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CPEX URGES STOCKHOLDERS TO CONSIDER THE FACTS OF
THE CERTAIN ALL-CASH FCB TRANSACTION
Independent Analysts Confirm Future Risk to Testim, Which
Underscores the Flawed Analysis of Mangroves Illusory Proposal
Exeter, NH, March 23, 2011
CPEX Pharmaceuticals, Inc. (NASDAQ: CPEX) today urged
stockholders to consider all the facts when voting on the approval of the FCB I Holdings Inc.
transaction, which will deliver stockholders $27.25 per share in cash if approved, and not to be
misled by Mangrove Partners flawed analysis and illusory proposal. The FCB transaction delivers
immediate and certain maximum after-tax value to stockholders. CPEX strongly recommends
stockholders review the facts outlined below and vote today FOR the FCB transaction proposal.
MANGROVES ANALYSIS IGNORES THE REALITY
OF CPEXS BUSINESS AND ITS FUTURE RISKS
Mangroves analysis isnt based in reality. Substantially all of CPEXs revenues are
generated from Testim
®
royalties and are at risk due to competition and litigation.
Mangrove incorrectly assumes Testim
®
royalties will continue at historical levels and fails to
account for increasing competition. As a point in fact, licensee Auxilium recently announced its
2011 revenue growth projections for Testim
®
are only expected to be approximately 4%-9%, a
significant change from the approximately 17% growth assumed by CPEX in its projections that were
included in CPEXs proxy statement. Independent analysts have also recently revised their Testim
®
projections downward but Mangrove has apparently chosen to ignore them or remain ignorant. To cite
just one of the many examples:
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...we already model a significant slowing of sales growth through 2015 and a sharp
erosion in sales in 2016 with the introduction of an Androgel generic...
Jefferies &
Company (February 11, 2011).
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In addition, Mangrove does not acknowledge the considerable litigation risk. As detailed in
their public filings, CPEX and Auxilium are engaged in a pending patent infringement lawsuit
against Upsher-Smith Laboratories, Inc. regarding a generic version of Testim
®
. An adverse outcome
in the
litigation could result in one or more generic versions of Testim
®
being launched in the U.S.
before the expiration of the Testim
®
patent in January 2025.
ISS ECHOES SIGNIFICANT RISKS OF MANGROVE PROPOSAL
In commenting on Mangroves opinion that CPEX should restructure the Company on a standalone
basis, ISS a leading independent firm that advises institutional investors on how to vote on
such proposals stated in its report that: ... the all-cash consideration [of the FCB
transaction] gives shareholder certainty of value, which may not be realized if shareholders opt
instead for a recapitalization and standalone strategy, given the execution, tax, litigation, and
competitive risks associated with any standalone strategy.
MANGROVES ILLUSORY PROPOSAL IS BASED ON BAD MATH
AND IS STILL NOT FINANCED
Mangroves math just doesnt add up
. The CPEX Board believes the Mangrove proposal would not
generate sufficient cash to pay the $28.00 special dividend because it severely underestimates the
cash CPEX would need for costs such as the appropriate cash reserves for operating the business,
transaction fees and expenses, financing fees, Mangroves own proposed interest reserve
requirements and the merger agreement termination fee. When properly considered, the special
dividend would be approximately $2.30 per share
less
than suggested in Mangroves proposal.
Therefore, at best, stockholders might see a $25.70 dividend, and thats only if Mangrove is able
to hold onto their supposed financing sources, who keep disappearing.
Mangroves financing is still not committed and is highly conditional.
Despite Mangroves
claims that its financing is in place, there are no commitment letters from its supposed financing
sources. In fact, Mangrove has inexplicably lost two of the original seven financing sources
related to its proposal.
Mangrove which has neglected to inform stockholders that it expressed an interest in
acquiring CPEX on December 15, 2010 at a discount to the Companys then-current market price of
$24.05 per share is trying to destroy this value-creating merger transaction for its own
benefit. Do not miss this opportunity to receive maximum cash value for your CPEX shares.
VOTE TODAY FOR THE $27.25 PER SHARE ALL CASH PREMIUM TRANSACTION
The CPEX special meeting of stockholders will be held on March 24, 2011, but stockholders can
vote today by following the instructions on their proxy card to submit their proxy via the Internet
or by telephone. If they have Internet access, CPEX encourages stockholders to record their vote
via the Internet. If stockholders have any questions or need assistance voting their shares, please
contact MacKenzie Partners, Inc., CPEXs proxy solicitor, at (800) 322-2885 or (212) 929-5500 (call
collect) or at cpex@mackenziepartners.com.
Permission to use quoted material was neither sought nor obtained.
About CPEX Pharmaceuticals, Inc.
CPEX Pharmaceuticals, Inc. is an emerging specialty pharmaceutical company focused on the
development, licensing and commercialization of pharmaceutical products utilizing CPEXs validated
drug delivery platform technology. CPEX has U.S. and international patents and other proprietary
rights to technology that facilitates the absorption of drugs. CPEX has licensed
2
applications of its proprietary CPE-215
®
drug delivery technology to Auxilium
Pharmaceuticals, Inc. which launched Testim, a topical testosterone gel, in 2003. CPEX maintains
its headquarters in Exeter, NH. For more information about CPEX, please visit
www.cpexpharm.com
.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
CPEX has filed with the Securities and Exchange Commission (the SEC) and furnished to its
stockholders a definitive proxy statement in connection with the proposed transaction with FCB (the
Definitive Proxy Statement). This communication may be deemed to be solicitation material in
respect of the merger with FCB. Investors and security holders of CPEX are urged to read the
Definitive Proxy Statement and the other relevant materials (when they become available) because
such materials will contain important information about CPEX and the proposed transaction with FCB.
The Definitive Proxy Statement and other relevant materials (when they become available), and any
and all other documents filed by CPEX with the SEC, may be obtained free of charge at the SECs
website at
www.sec.gov
. In addition, investors and security holders may obtain free copies
of the documents CPEX files with the SEC by directing a written request to CPEX Pharmaceuticals,
Inc., 2 Holland Way, Exeter, NH 03833, Attention: Chief Financial Officer. Copies of CPEXs
filings with the SEC may also be obtained at the Investors section of CPEXs website at
www.cpexpharm.com/investor.htm
.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND THE OTHER
RELEVANT MATERIALS (WHEN THEY BECOME AVAILABLE) BEFORE MAKING ANY VOTING OR INVESTMENT DECISION
WITH RESPECT TO THE PROPOSED TRANSACTION WITH FCB.
CPEX and its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the security holders of CPEX in connection with the proposed
transaction with FCB. Information about those directors and executive officers of CPEX, including
their ownership of CPEX securities, is set forth in the Definitive Proxy Statement (filed with the
SEC on February 4, 2011) and in the proxy statement for CPEXs 2010 Annual Meeting of Stockholders
(filed with the SEC on April 9, 2010), as supplemented by other CPEX filings with the SEC.
Investors and security holders may obtain additional information regarding the direct and indirect
interests of CPEX and its directors and executive officers in the proposed transaction with FCB by
reading the proxy statements and other public filings referred to above.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Certain items in this document may constitute forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve certain risks and uncertainties that could cause actual results
to differ materially from those indicated in such forward-looking statements, including, but not
limited to: the proposed transaction with FCB; the performance of CPEX; the benefits of the
proposed transaction with FCB and such other risks and uncertainties as are detailed in the
Definitive Proxy Statement, in CPEXs Annual Report on Form 10-K filed with the SEC on March 29,
2010, and in the other reports that CPEX periodically files with the SEC. Copies of CPEXs filings
with the SEC may be obtained by the methods described above. CPEX cautions investors not to place
undue reliance on the forward-looking statements contained in this document or other filings with
the SEC.
The statements in this document reflect the expectations and beliefs of CPEXs management only
as of the date of this document and subsequent events and developments may cause these
3
expectations and beliefs to change. CPEX undertakes no obligation to update or revise these
statements, except as may be required by law. These forward-looking statements do not reflect the
potential impact of any future dispositions or strategic transactions, including the proposed
transaction with FCB, that may be undertaken. These forward-looking statements should not be relied
upon as representing CPEXs views as of any date after the date of this document.
4
*****
The press release above was issued on March 23, 2011
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