- 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 /CNW/ - 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
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The
Truth
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"Knight has
'first-in-class' governance"
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- 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
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"Jonathan Goodman
has
always competed against Pharmascience"
"There is nothing new
about the 'conflict'"
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- 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
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"Mr. Goodman has been
a fierce competitor of Pharmascience"
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- 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
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"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)"
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- 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
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"The blind voting
trust … [is a] further demonstration of Mr. Goodman's singular
focus on the success of Knight"
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- 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
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"Knight has generated
$220 million of net income"
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- 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
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"[Meir Jakobsohn] can
gamble with your cash, to place risky bets on licensing early-stage
pharmaceuticals"
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- 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
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"Medison is failing
in its own business"
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- 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
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"Medison is seeking
to control Knight"
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- 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
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"[Meir Jakobsohn] has
conflict of interest due to his controlling stake in
Medison"
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- 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
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"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.
About Medison
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.
SOURCE Medison Biotech Ltd.