AnorMED Recommends Shareholders Reject Dissident Slate Of Director Nominees
AnorMED Inc. On Track to Maximize Shareholder Value Under Leadership of Current Management & AnorMED Proposed Board Slate
Dissidents’ Board Slate Puts Shareholder Value at Significant Risk
March 27, 2006, Vancouver, B.C. – The Board of Directors of AnorMED Inc. (TSX: AOM; AMEX:AOM) has recommended that shareholders vote in favor of the AnorMED slate of director nominees and reject any slate of director nominees that may be proposed by a dissident group of shareholders, represented by The Baker Group, holding approximately 23 percent of the Company’s shares.
The slate of directors recommended by the AnorMED Board and Management includes three* new nominees selected for their expertise in drug commercialization, operational and financial leadership and the management of profitable companies:
Michael Abrams, President & CEO, Director & Founder, AnorMED Inc. 2006 Recipient of the 2006 Julia Levy award for biomedical innovation and commercialization in Canada.
*William L. Hunter, President & CEO, and co-founder, Angiotech Pharmaceuticals, Inc., Director of the Michael Smith Foundation for Health Research. Former director of Neuromed Technologies, Vigil Health Management and Viewpoint.
*Jeanette Fritzky, Independent Consultant. Former Head of Global and US Marketing for Chiron Corporation, BioPharmaceutical Division.
*Michael Van Every, CA, Current Director of Biovail Corporation and Chair of Biovail Corporation’s Audit Committee. Current Director of Kelman Technologies.
Julia Levy, Director of AnorMED Inc., former President & CEO, and co-founder of QLT Inc., Director of a number of private biotechnology companies and Working Opportunity Fund, a labour-sponsored mutual fund, Past President of the Canadian Federation of Biological Sciences, and an Officer of the Order of Canada.
Colin Mallet, Director of AnorMED Inc., former President and CEO of Sandoz Canada Inc. (now Novartis), past Chair of the Canadian Association of Research-based Pharmaceutical companies, Director on the boards of Axcan Pharma Inc., MethylGene Inc. and Migenix Inc.
Michael Cleare, Director of AnorMED Inc., Executive Director, Science & Technology Ventures, Columbia University, Former Managing Director & President, Electronics Materials Division and Pharmaceutical Materials Group, Johnson Matthey plc
David Scott, Chairman of AnorMED Inc., Corporate Director, Former President MDS Ventures Pacific Inc., a subsidiary of MDS Capital Corporation.
Shareholders are recommended to vote their BLUE AnorMED proxy in advance of the Special Meeting to be held on April 21, 2006. Only registered and appointed proxyholders will be able to vote at the Special Meeting. For more information on how to vote your BLUE proxy or where to receive the AnorMED Management Proxy Circular please contact Georgeson Shareholder, AnorMED’s proxy and information agent at the following North American toll free number 1-866-267-8910 or collect at 416-642-7069. For additional and updated information shareholders are welcomed to visit our website at www.anormed.com
The reasons for the Board’s recommendation that shareholders vote FOR AnorMED’s slate of directors, outlined in AnorMED’s proxy circular, are summarized below.
* As of the time of today’s announcement, the Baker Group has disclosed neither the basis for their requisition to replace the Board nor any specific plans for AnorMED Inc.
* The Baker Group’s slate lacks independence needed to act in the best interests of all shareholders. The Baker Group are attempting to obtain control of AnorMED without paying a control premium, and therefore are not acting in the best interests of AnorMED and its shareholders. Dr. Baker’s Rights Offering Proposal in the fall of 2005 is an example of his attempt to further his own interests and disregard those of all AnorMED shareholders.
* The Baker Group’s slate of nominees is not independent, because at least six of the eight nominees of the Dissidents have business connections to the Baker Group. The election of the Baker Group’s proposed slate of nominees would result in the Baker Group achieving effective control of the Corporation through control of the Board without having to pay AnorMED Shareholders a change of control premium. For this reason, Dr. Michael Abrams, the Corporation’s Chief Executive Officer and founder, declined to participate on the Baker Group’s slate of nominees.
* AnorMED is in advanced partnering discussions for the commercialization of MOZOBILTM. These partnerships are expected to maximize value and provide cash to fund the ongoing development activities of the Corporation through 2007 – completion of these arrangements may be impaired by the Baker Group’s initiatives.
* AnorMED’s senior management is crucial for its scientific and clinical success, and its ability to maximize the value of AnorMED’s shares; yet Dr. Baker has deliberately created a climate of uncertainty regarding his intentions for AnorMED and the ongoing role of the Corporation’s senior management. This has significant implications for AnorMED’s ability to retain and attract key employees and management.
* In support of AnorMED’s plan to commercialize MOZOBILTM, AnorMED’s lead Phase III product, the Board and Management recently hired a Vice President of Marketing and Director of Medical Affairs to develop and prepare a commercialization plan and build market awareness of MOZOBILTM. AnorMED also intends to seek a Chief Operating Officer within the next year to support its commercial operations. As AnorMED continues to progress, the Board will assess all senior management roles, responsibilities and requirements.
* The Board is confident that once shareholders understand the facts and motivations surrounding the Baker Group’s attempt to takeover AnorMED, shareholders will vote for AnorMED’s nominee directors, including Michael Abrams, the current CEO. The Board of Directors of AnorMED urges shareholders to NOT sign or return any forms of proxy that may be sent to you by the dissident shareholder group.
AnorMED is a chemistry-based biopharmaceutical company focused on the discovery, development and commercialization of new therapeutic products in the areas of hematology, HIV and oncology. The Company has a product in Phase III development, a product in Phase II development and a research program focused on a novel class of compounds that target specific chemokine receptors known to be involved in a variety of diseases including HIV. Additional information on AnorMED Inc. is available on the Company’s website www.anormed.com.
Note: Certain of the statements contained in this press release may contain forward-looking statements and forward-looking information within the meaning of applicable securities laws, including the Ontario Securities Act, Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Statements or information regarding strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management are forward-looking statements. The words “anticipates, “believes”, “budgets”, “could”, “estimates”, “expects,” “forecasts”, “intends”, “may”, “plans”, ”projects”, “schedule”, “should”, “will”, “would” and similar expressions are intended to identify forward-looking statements or information, although not all forward-looking statements or information contain these identifying words. Plans, intentions or expectations disclosed in any forward-looking statements or information should not be read as guarantees of future results or events, and will not necessarily be accurate indications of whether or the times at or by which such results or events will be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Investors are referred to the discussion of such risks, uncertainties and other factors in AnorMED’s Final Short Form Prospectus dated December 1, 2005 filed on SEDAR with Canadian securities regulatory authorities and in Exhibit 99.1 to AnorMED’s Report on Form 6-K filed with the U.S. Securities and Exchange Commission on December 23, 2005. Except as required by law, AnorMED expressly disclaims any intention and undertakes no obligation to update any forward-looking statements or information as conditions change.
TELECONFERENCE CALL NOTIFICATION: Monday, March 27, 2006 9:00am EST/6:00am PST
On March 27, 2006, AnorMED Inc. will host a teleconference call at 9:00 am EST (6:00 am PST). Participants will be in listen only mode. To listen to the teleconference please dial 1-800-558-5253 in Canada and the U.S. or 1-416-626-4100 Internationally after 9:00 am EST. The reservation number required for access is #21288034. This call will be available on replay until April 26, 2006. This call will also be webcast from AnorMED’s website at www.anormed.com.
ADDITIONAL INFORMATION FROM THE ANORMED PROXY CIRCULAR FOR SHAREHOLDERS AND REPORTERS
RATIONALE TO SUPPORT ANORMED’S NOMINEES:
The Baker Group is attempting to obtain control of AnorMED without paying AnorMED Shareholders a control premium, and therefore Dr. Baker is not acting in the best interests of AnorMED and its Shareholders.
The Baker Group’s Slate Lacks Independence Needed to Act in the Best Interests of All Shareholders.
The election of the Baker Group’s proposed slate of nominees would result in the Baker Group achieving effective control of the Corporation through control of the Board without having to pay AnorMED Shareholders a change of control premium. At least six of the eight nominees of the Dissidents have business connections to the Baker Group, including:
• Dr. Baker himself.
• Kelvin Neu - an associate at Baker Brothers Advisors, LLC.
• Berl Nadler – The Baker Group’s Canadian lawyer.
• Jacques Lapointe - Certain entities of the Baker Group hold approximately 23% of the shares of ConjuChem Inc. (on a fully-diluted basis), a company in which Dr. Baker and Mr. Lapointe are directors. Mr. Lapointe was also President and Chief Executive Officer of ConjuChem Inc. from October 2003 to October 2005 during which time certain entities of the Baker Group were the sole purchasers of a $15 million convertible senior subordinated notes financing.
• Henry Fuchs – Certain entities of the Baker Group owned 26.4% of a company in which Mr. Fuchs was at the time the chief executive officer. Mr. Fuchs later joined another company as chief medical officer just prior to certain entities of the Baker Group expanding their ownership in such company.
• Joseph Dougherty – Mr. Dougherty’s company, Seaview Securities LLC, was engaged in 2003 by ConjuChem Inc., a company in which Dr. Baker is a director and which is chaired by another Baker Group nominee, Jacques Lapointe (see above). Seaview received 200,000 options, half of which it exercised, selling the resulting shares for a profit of approximately $250,000.
The Baker Group asks that Shareholders abandon the best corporate governance practices currently followed by AnorMED in favour of a board of directors comprised mainly of individuals whose business interests are related to the Baker Group. If the Baker Group wants to control the board of AnorMED, and therefore the Corporation itself, they should propose a take-over bid and pay a fair price for control. The lack of independence in the Baker Group’s proposed slate of directors is troubling to the Corporation’s management and to all Board members with the exception of Dr. Baker.
Dr. Baker’s Rights Offering Proposal was an Attempt to Further his Own Interests and Not Those of the Corporation’s Shareholders
Dr. Baker’s motives to increase the Baker Group’s control over the Corporation were evidenced by his actions in the fall of 2005 when the Corporation required capital to fund its operations and development pipeline. Dr. Baker insisted that the Corporation conduct a rights offering that the Baker Group would backstop and purchase, for a fee payable by the Corporation to the Baker Group’s companies, any Common Shares not taken up by the Corporation’s minority Shareholders. One of the features of Dr. Baker’s proposal was that the discount of the purchase price to the then market value of the Corporation’s Common Shares would be relatively modest (contrary to typical rights offerings), thereby not creating an incentive for Shareholders, other than the Baker Group, to participate. This could have resulted in the Baker Group increasing their ownership in AnorMED, potentially up to 36%, without having to pay a change of control premium to existing Shareholders.
In response to the Board’s concern that the Baker Group may effectively acquire control by backstopping the proposed rights offering, Dr. Baker suggested that any shares purchased by the Baker Group that caused the Baker Group to exceed a 24% ownership level of the Corporation would be subject to a voting trust agreement with the Corporation. While Dr. Baker’s proposal attempted to address the issue of voting control in part, it would still have allowed the Baker Group’s voting interest in the Corporation to increase and in any case, his proposal did not address the fact that Shareholders of the Corporation would not be receiving a control premium, nor did it prevent the Baker Group from selling their control position at a premium to a third party.
As a director of the Corporation, Dr. Baker has a duty to act honestly and in good faith with a view to the best interests of the Corporation and the Shareholders at large and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Even after the Board received independent financial advice from Blair Franklin Partners Inc. advising the Board to proceed with a bought deal financing, Dr. Baker continued to insist that the appropriate capital markets strategy for AnorMED was his proposed rights offering. Dr. Baker’s actions subsequent to the closing of the financing suggest that Dr. Baker was being motivated by a desire to increase the percentage interest in the Corporation held by the Baker Group and not by his concerns for the best interests of the Corporation or its Shareholders at large.
AnorMED’s senior management is crucial for its scientific and clinical success, and its ability to maximize the value of your shares; yet Dr. Baker has deliberately created a climate of uncertainty regarding his intentions for AnorMED and the ongoing role of the Corporation’s senior management. This has significant implications for AnorMED’s ability to retain and attract key employees and management.
After being actively involved with the other directors in establishing strategy for AnorMED, and voting in favour of the most recent strategic plan and objectives, Dr. Baker has aggressively questioned the competence of the Board in its guidance of the Corporation. This criticism has not been productive in light of his failure to indicate any preferred alternative strategy. Despite repeated requests, Dr. Baker has reinforced the Board’s position that he is more interested in gaining control rather than in creating value for the Shareholders of the Corporation other than the Baker Group. By choosing to requisition a Special Meeting, rather than actively pursuing a mutually agreeable resolution focused on the optimal strategic direction for the Corporation, Dr. Baker has deliberately taken a path that will incur significant and unnecessary expenses for the Corporation and its shareholders. Not only have substantial legal expenses been incurred by both sides, but, if his slate is elected, all of the existing change of control provisions will be triggered, at a potential cost of $2.7 million and accelerated option vesting for management, if they stay in the employ of the Corporation for the first six months after the date of the Shareholders meeting. This is an important fact which Dr. Baker failed to mention in his press release on March 17, 2006.
For two months, Dr. Baker refused any form of compromise, despite numerous approaches by David Scott, the Chair of the Board and by Mike Abrams, the Chief Executive Officer. In fact, on February 27, 2006 he stated that his position, outlined on January 5, 2006 had not been intended for negotiation. When he did finally move towards a compromise proposal, this was accepted by the Special Committee of the Board, with the proviso that there be adequate severance protection for the senior executives of AnorMED in the event of termination. This was due to the prolonged and contentious nature of the process and the magnitude of change to the Board under the compromise proposal. Employment provisions for change in control are not abnormal, and are usually triggered if 50% or more of the Board members are replaced in a two (2) year period (as is the case in the compromise solution suggested by Dr. Baker). There is, however, a mechanism in AnorMED’s change of control agreements, to deal with regular attrition, where a major change in the Board agreed by at least 80% of the directors would not be defined as triggering the change in control mechanism.
Contrary to Dr. Baker’s assertions in his Press Release on March 17, 2006, the Special Committee and the senior management team of nine (9) people at AnorMED supported a position in which the management would not receive the approximately $2.7 million retention bonuses or the accelerated vesting of options, specified in the change of control agreements. However, the approval of the compromise solution by the Special Committee was contingent on the retention of severance provisions for management, similar to those in the change of control contracts; these would cost AnorMED nothing, if there were no plans to terminate or constructively dismiss senior management. Rather than taking this opportunity to heal some of the wounds caused by the process, Dr. Baker rejected the offer and insisted on termination terms, which, in the case of long service, were less than terms that some senior management already had in their standard employment contracts. Dr. Baker further compounded the problem, by insisting that the individual change of control contracts, which are due for extension every two (2) years, should not be extended for the another two year period, undermining senior management’s confidence in their future with AnorMED with a Board heavily influenced by Dr. Baker.
This rejection by Dr. Baker of the compromise solution seems incomprehensible, particularly in light of the fact that the election of Dr. Baker’s slate will trigger the full cost and severance provisions in the change of control contracts. Furthermore, Dr. Baker’s actions have exacerbated the uncertainty among members of the Special Committee and senior management of AnorMED as to Dr. Baker’s intentions. As a result, the view of the Special Committee is that if Dr. Baker’s slate is elected, there is a high risk that progress in the development of MOZOBIL and AnorMED, and the value of the Corporation, could be seriously undermined.
AnorMED is in advanced partnering discussions for the commercialization of MOZOBILTM. These partnerships are expected to maximize value and provide cash to fund the ongoing development activities of the Corporation through 2007 – completion of these arrangements may be impaired by the Baker Group’s initiatives
AnorMED is currently focused on achieving worldwide approval for the sale of MOZOBILTM for collection of stem cells for stem cell transplantation in cancer patients. In this indication alone, MOZOBILTM represents a US$200 million to US$300 million annual market opportunity worldwide, which could increase significantly if any of the applications in adjunctive cancer treatment and/or tissue repair come to fruition. AnorMED is focused on a strategy to commercialize MOZOBILTM either alone or with a partner in North America and to license MOZOBILTM to a partner in the EU and rest of the world.
The Corporation is in advanced discussions with several potential partners regarding the commercialization of MOZOBILTM in Europe and globally. Terms discussed to date include significant upfront payments, milestone payments and royalty rates that reflect the advanced development stage of the product. The ongoing discussions suggest that the Corporation will receive a royalty rate consistent with rates that would be obtained if the Phase III results were already known. The royalty rates being discussed are currently in the range of 25% to 40% of revenue and may vary based on the magnitude of the milestone payments and the level of revenue. The Corporation believes that the upfront and near term milestone payments should be sufficient to avoid further financings prior to the Corporation’s publication of top-line data from its pivotal Phase III clinical trials.
The hostile process initiated by the Corporation’s largest Shareholder and a potential change in control of the Corporation through the election of the Dissident’s slate of nominees has and will continue to make it difficult for AnorMED to finalize a partnership. Potential partners are concerned about the Board’s ongoing support of such a significant collaboration, and have expressed concern regarding the potential loss of senior management and staff crucial to the successful execution of the MOZOBIL program.
Europe is a substantial market representing roughly half of the potential worldwide sales for MOZOBIL. AnorMED has the opportunity to accelerate, by one year, the commercialization of MOZOBIL in Europe through an early Conditional Marketing Approval (CMA). This CMA will only be possible if AnorMED rapidly establishes a European partner to undertake certain critical European Union regulatory responsibilities and provide sales launch expertise. AnorMED does not currently have the resources to substantially develop or launch MOZOBIL in the European Union. A delay in the development of MOZOBIL in Europe will adversely effect the launch timing and likely the potential market size thereby reducing the value of this important asset.
AnorMED’s partners in Europe will influence what it can achieve in North America. Some potential partners for Europe are also interested in partnering in North America. Such alternatives could offer substantial synergies. AnorMED has engaged an experienced financial advisor to assist the Corporation in assessing alternatives to maximize the value of AnorMED and its MOZOBIL asset.
Important Steps Being Implemented to Strengthen the Board and Management
As the Corporation completes the development of MOZOBIL and begins to execute its commercialization strategy, senior management of the Corporation and the Board will be critical to the success of the Corporation’s commercialization efforts. In order to move the Corporation from its current stage of research and development and clinical trials to commercialization, the Board has long recognized that additional commercial and operating expertise will be necessary at both the senior management and Board levels. To address these requirements the Nominating Committee and Special Committee has recommended the following new nominees to the Board, namely Jeanette Fritzky, William L. Hunter, and Michael Van Every. The new nominees were selected for their expertise in drug commercialization, leadership in transition to profitability and finance.
The Board has recently played an active role in hiring a Vice President of Marketing and the Corporation has hired a Director of Medical Affairs to develop and prepare a commercialization plan and build awareness of MOZOBIL within the target market. The Corporation also intends to hire a Chief Operating Officer with commercial experience within the next year to aid in the Corporation’s transition from that of a purely research and development company to one which includes commercial operations. As the Corporation continues to progress, the Board will assess all senior management roles, responsibilities and requirements.
- Contact Information
- Carla Fondrick
- Communications Associate
- AnorMED Inc.
- Contact via E-mail
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