Highlights Destruction of Nearly 95% in
Stockholder Value Under Chairman and CEO Dr. Paul Wagner’s
Leadership
Exposes Forte’s Worst-in-Class Governance
and Repeated Attempts to Use Corporate Machinery as an Entrenchment
Tactic, Including Most Recent Private Placement, Adoption of a
Low-Trigger Poison Pill and Violation of SEC Rules in Setting
Record Date for Upcoming Annual Meeting
Encourages Stockholders to Vote for
Independent Director Candidates Committed to Acting in
Stockholders’ Best Interests – Michael Hacke and Chris McIntyre –
on the WHITE Proxy Card at Forte’s
Upcoming Annual Meeting
Camac Partners, LLC (“Camac”) and ATG Capital Management, LLC
(“ATG”) (together with the other participants in their
solicitation, the “Concerned Stockholders,” the “Group” or “we”),
who collectively own approximately 8.5% of the outstanding common
stock of Forte Biosciences, Inc. (Nasdaq: FBRX) (“Forte” or the
“Company”), today announced that they have filed a definitive proxy
statement with the U.S. Securities and Exchange Commission (the
“SEC”) in connection with Forte’s 2023 Annual Meeting of
Stockholders (the “Annual Meeting”) scheduled for September 19,
2023. In addition, the Group sent a letter to Forte’s stockholders,
which can be viewed below.
***
Fellow Stockholders,
Camac and ATG collectively represent one of the largest
stockholders of Forte. We believe our significant, long-term
investment in the Company means our interests are squarely aligned
with yours. Despite our best efforts to engage constructively with
Forte’s leadership for over a year now, management and the Board
have repeatedly rebuffed us. Instead, we believe they have
opted to disenfranchise stockholders and
entrench themselves by adopting a poison pill, appointing a
conflicted director without stockholder approval, pursuing highly
dilutive capital raises and violating SEC rules in connection with
the upcoming Annual Meeting. These are just a few of the
reasons why our Group is seeking your support to replace the two
incumbent directors who are up for election at this year’s Annual
Meeting: Chairman and CEO Dr. Paul Wagner and Dr. Lawrence
Eichenfield.
Drs. Wagner and Eichenfield have overseen the destruction of
immense stockholder value and must, in our view, be held
accountable. They have also approved what we consider to be
entrenching capital raises and other anti-stockholder actions. We,
as stockholders, deserve directors who will consistently advocate
for our interests in the boardroom, rather than the interests of a
select few. That is why we are recommending you vote on the
WHITE Proxy Card to elect our
highly qualified and independent nominees – Michael Hacke and Chris
McIntyre – at the upcoming Annual Meeting. They each will bring to
Forte’s boardroom sorely needed independence, capital allocation
acumen, financial expertise and a commitment to acting in
stockholders’ best interests.
THE CASE FOR BOARDROOM CHANGE: VALUE
DESTRUCTION, POOR CAPITAL ALLOCATION AND ANTI-STOCKHOLDER ACTIONS
SINCE FORTE’S PUBLIC OFFERING
Forte’s shares have dramatically underperformed peers and
biopharmaceuticals indices over all relevant time horizons. Since
going public via a reverse merger with Tocagen Inc. in 2020, the
Company has wiped out almost 100% of its equity value. This is some
of the worst performance we have seen in our entire investing
careers, and we believe it is directly attributable to Dr.
Wagner’s lack of regard for the Company’s owners.
1-Year TSR
3-Year TSR
TSR Since IPO
Forte Biosciences
-13.90%
-95.60%
-94.76%
NASDAQ Biotechnology Index
14.71%
1.48%
3.75%
S&P Pharmaceuticals Select Industry
Index
-0.23%
-3.81%
0.73%
As of market close on May 24, 2023 (the
day before Camac’s preliminary proxy statement was filed with the
SEC).
In our view, the Board and management’s inability – or
unwillingness – to establish a sensible capital allocation strategy
or respect sound corporate governance surely led to the seemingly
unprecedented emergence of four separate 13D filers last summer.
These independent investors raised concerns with Forte’s
performance, operations, strategy and the Board’s entrenchment
maneuvers – which are the same issues that we are seeing further
perpetuated by the same directors overseeing the Company today.
Long-term stockholders will recall that Forte’s singular asset
for atopic dermatitis – FB-401 – failed in its phase 2 clinical
trial in September 2021.1 This is what led to the Company’s highly
speculative pivot to the development of FB-102 for autoimmune
diseases, which was first disclosed to investors in the Company’s
FY 2021 10-K a full six months later. Despite Forte peddling FB-102
as demonstrating potentially “best in class activity,” the reality
is that the compound is still in preclinical indication. We believe
the knee-jerk pivot to FB-102, as well as the recent dilutive
private placement to select investors at prices well below Forte’s
cash value, was done as a “save-face” to protect management and the
Board from stockholders who are fed up with the Company’s long-term
underperformance and want accountability.
Ahead of this year’s Annual Meeting, we want to ensure you have
all the facts regarding this Board’s track record. The Forte Board
– under Drs. Wagner and Eichenfield’s leadership – has taken the
following actions to disenfranchise stockholders over the past 16
months:
- Executing a highly dilutive private placement on July 28, 2023
(the “2023 Private Placement”), which involved placing over 15
million shares of Forte stock with select investors at a price well
below the Company’s net cash per share. Based on the previously
disclosed share count prior to the 2023 Private Placement, the
Company issued over 72% of the outstanding shares on a
pre-issuance basis, and over 118% of the outstanding shares on a
pre-issuance basis when factoring in the pre-funded warrants.
Considering this was done following the Board delaying the
Annual Meeting by 110 days after the anniversary of the
preceding year’s Annual Meeting while facing an election contest,
we believe it is clear the Board acted to further entrench
itself.
- Adopting a “poison pill” with a 10% primary trigger as a
defensive maneuver in response to legitimate feedback from
significant stockholders in July 2022, and then waiving the pill
for select investors to participate in the 2023 Private Placement,
which in our view served to further entrench the incumbents.
- Diluting Forte’s stockholders by increasing the Company’s
outstanding share count by over 140% from under 15 million shares
in June 2022 to over 36 million today through ill-advised
capital raises at a discount to Forte’s net cash per share. If
the Board’s motive in adopting the poison pill was genuinely about
protecting a “control premium,” then why would the Company have
sold the majority of its shares at prices well below its
liquidation value?
- Violating SEC Rule 14a-13(a)(3) by failing to provide
adequate notice of the record date for the upcoming Annual Meeting.
The Company’s lack of proper notice of the record date may result
in many stockholders losing the right to vote in connection with
the Annual Meeting.
- Indicating (through Company counsel) that while Camac may
prevail in having its director candidates elected to the Board, if
Dr. Wagner was not reelected at the upcoming Annual Meeting by
stockholders, the Board planned to immediately reappoint him as a
director following the Annual Meeting. This demonstrates a
blatant disregard for stockholder wishes.
- Unilaterally appointing David Gryska, an individual with a
documented 20-year long relationship with Dr. Wagner, as a director
to the Board with a term expiring at the 2025 Annual Meeting, while
the Company was facing mounting stockholder unrest in January
2023.
- Allowing Dr. Wagner, certain executives and other directors to
participate in the 2023 Private Placement by selling them $1.16
million in Forte stock, while excluding ordinary investors and not
running a full capital raise process.
- Conducting a dilutive and seemingly defensive at-the-market
offering of 5.6 million shares in August 2022 without a justifiable
business purpose and after multiple investors filed 13Ds indicated
their disagreement with the direction of Forte’s performance,
strategy and operations.
- Failing to constructively engage with multiple 13D filers to
improve Forte’s go-forward strategy, financial performance or
governance policies.
Additionally, stockholders should be aware that despite being
the founder, CEO and Chairman of Forte, Dr. Wagner sold
1 million shares of Forte in September
2021, netting approximately $4.35 million in
cash.2 We seriously question how much Dr. Wagner believes in
the long-term viability of compound FB-102, or Forte for that
matter, given he has been an active seller in recent years. Not
only that, but he was also somehow allowed to participate in the
2023 Private Placement with other executives and members of the
Board and purchase shares at a discount to the Company’s net cash
per share.
We believe that the recent highly dilutive share issuances
demonstrate that Drs. Wagner and Eichenfield appear more focused on
their own entrenchment (and enrichment) than improving Forte’s drug
pipeline, capital allocation approach, and most importantly,
upholding sound corporate governance as Board members of a publicly
traded company.
THE PATH FORWARD: ADDING NEW, INDEPENDENT
DIRECTORS WITH CAPITAL ALLOCATION AND INVESTMENT EXPERTISE TO
FORTE’S BOARDROOM, WHO ARE COMMITTED TO ACTING IN STOCKHOLDERS’
BEST INTERESTS
Camac has filed legal action in Delaware to hold Forte, Dr.
Wagner and the incumbent directors accountable for breaches of
their fiduciary duties, to unearth the true incentives behind the
capital raises and most importantly, to protect stockholders’
interests. While this litigation proceeds, our Group is also
investing our time, energy and capital to elect two highly
qualified directors to Forte’s Board at the upcoming Annual
Meeting. Michael Hacke and Chris McIntyre are capital allocation
experts with proven investment track records and substantial
capital markets expertise. We believe that they are the right
change agents to help the Board reassess the Company’s approach to
capital allocation and operations and can help put Forte back on
the right track to improving stockholder returns. Perhaps most
importantly, Messrs. Hacke and McIntyre will bring a commitment to
acting in stockholders’ best interests.
We encourage you to read Messrs. Hacke and McIntyre’s summarized
biographies below before deciding whether two individuals with
significant capital allocation experience would be better stewards
of your capital than Drs. Wagner and Eichenfield, who have overseen
the destruction of approximately 95% in value since serving on
Forte’s Board. Our Group’s highly qualified nominees are:
Michael Hacke. We believe Mr. Hacke’s investment
advisory, capital markets and capital allocation expertise will be
additive to Forte’s Board.
- Founder and Managing Member of Steel City Capital Investments,
LLC, the general partner of Steel City Capital, LP, a long-biased
investment partnership which employs a value-oriented investing
strategy.
- Previously served as Vice President at Macquarie Infrastructure
and Real Assets Inc., where he supported the management team at
Macquarie Infrastructure Corporation (formerly NYSE: MIC).
- Former Assistant Vice President of Equity Research in Master
Limited Partnerships and Diversified Natural Gas at Barclays plc
(NYSE: BCS).
- Former Analyst in the Credit Risk Management department at
Morgan Stanley (NYSE: MS).
Chris McIntyre. We believe Mr. McIntyre’s 15+ years of
investment experience, including in public equities, private
equity, distressed debt and restructurings, will be additive to
Forte’s Board.
- Founder, Chief Investment Officer and Managing Partner of
McIntyre Capital Management, LP, an investment firm that makes
concentrated investments in value-oriented equity and debt
securities, based on in-depth fundamental research.
- Previously served as Managing Director at MAK Capital, an
investment fund focused on value equity and distressed debt.
- Former Senior Analyst and Sector Head at Cobalt Capital, a
multi-stage investment firm, and Senior Analyst at MDR Capital, a
provider of investment advisory services.
- Former analyst and portfolio manager at FNY Securities in
merger and risk arbitrage investments.
We look forward to being in touch in the coming weeks with more
information about our highly qualified director candidates and
their vision for Forte.
Thank you in advance for your support.
Sincerely,
Eric Shahinian
Gabi Gliksberg
Camac Partners, LLC
ATG Capital Management, LLC
***
VOTE “FOR” THE CONCERNED STOCKHOLDERS’
HIGHLY QUALIFIED NOMINEES ON THE WHITE
PROXY CARD AHEAD OF FORTE’S ANNUAL MEETING ON SEPTEMBER 19,
2023.
ONLY YOUR LATEST DATED
VOTE COUNTS. IF YOU VOTED THE COMPANY’S PROXY CARD
PREVIOUSLY, A LATER DATED VOTE FOR THE CONCERNED STOCKHOLDERS’
NOMINEES WILL OVERRIDE YOUR PRIOR VOTING INSTRUCTIONS.
IF YOU HAVE ANY QUESTIONS REGARDING HOW TO
VOTE, PLEASE CALL SARATOGA PROXY CONSULTING AT (888) 368-0379 OR
(212) 257-1311 OR BY EMAIL AT INFO@SARATOGAPROXY.COM
***
About Camac
Camac is a private investment firm founded in 2011. Camac
focuses on extremely mispriced assets in discrete pockets of
opportunity. Camac prides itself on its unique sourcing, flexible
mandate, and constant focus on non-competitive opportunities. Its
investments are long term in nature and focused on compounding
capital over several decades rather than months or years.
About ATG
ATG is a privately-held investment firm that manages investment
vehicles for select accredited investors. Founded by Gabi
Gliksberg, ATG invests primarily in public equity markets,
utilizing alternative strategies and shareholder activism, in
pursuit of providing superior, long term investment returns. Visit
atgfund.com for more information.
1
Clinical Trial of FB-401 For the Treatment
of Atopic Dermatitis Fails to Meet Statistical Significance
(September 2, 2021).
2
Forte: Form 4 Filing - Wagner Paul A.
(September 8, 2021).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230825653022/en/
Saratoga Proxy Consulting LLC John Ferguson / Joe Mills,
212-257-1311 info@saratogaproxy.com
Longacre Square Partners Charlotte Kiaie / Ashley Areopagita,
646-386-0091 concernedFBRXstockholders@longacresquare.com
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