Aviragen Therapeutics Issues Letter to Stockholders
Reiterates Benefits of Proposed Merger with
Urges All Aviragen Stockholders to Vote FOR the Proposed Merger on the WHITE Proxy Card Today
In the letter, Aviragen notes that the Company Board of Directors unanimously recommends that stockholders vote FOR the proposed merger on the WHITE proxy card. The letter also highlights that:
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Compared to the Company's current market capitalization of approximately
$24 million i, the potential value in the merger of your Aviragen shares is$106 million , based on the value of comparable companies.
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Aviragen stockholders will have the opportunity to participate in the significant upside potential of the combined company, which will be focused on developing Vaxart's oral recombinant vaccines and Aviragen's direct-acting antivirals to treat infections having limited therapeutic options.
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The Company's Board conducted an extensive and diligent evaluation of strategic alternatives before unanimously agreeing the merger with
Vaxart is in the best interest of all Aviragen stockholders.
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The merger is opposed by a small group of stockholders. This group has offered Aviragen stockholders no alternative value creating plan to the proposed merger with
Vaxart and is seeking to elect a Board that has little or no experience in the biotechnology industry. The group is led by Digirad, which made only a$681 investment in the Company, and whose Chairman, together with his associates, was found by theSEC to have violated securities laws and paid over$200,000 in fines and agreed to a cease and desist to settle those charges.
The full text of the letter is below:
Dear Fellow Stockholder,
Aviragen's Special Meeting of Stockholders to approve our proposed merger with
At this meeting, you have an important choice to make regarding the future of Aviragen. Your Board of Directors has conducted an extensive review of strategic alternatives available to the Company, and unanimously believes that the proposed merger with
A small group of dissident stockholders - who call themselves the Concerned Aviragen Shareholders ("CAS") Group - disagree with your Board's recommendation. Instead, this group is pursuing an activist campaign against the transaction so that they have the opportunity to nominate individuals for election to the Company's Board at our upcoming Annual Meeting.
Together, Aviragen and
CREATING A LEADING VACCINE COMPANY WITH MULTIPLE OPPORTUNITIES FOR VALUE CREATION
The proposed merger of Aviragen and
We believe there is substantial economic upside to Vaxart's transformative technology, and that the 40 percent interest that Aviragen and its stockholders will have in this technology will produce substantial value for you, in addition to the potential value of our current anti-viral therapeutics. We believe that the financial resources of the combined company and the experienced biotechnology management and directorial team maximize the likelihood of success.
Following completion of the transaction, the combined company will be well-financed with a cash runway through the second quarter of 2019. This will enable us to achieve value creating milestones that include efficacy data from Aviragen's BTA074 HPV Phase 2 data, Vaxart's Phase 2 norovirus vaccine data, and the filing of additional INDs for new programs. The estimated size of these various markets is below:
Market |
Global Vaccines |
Seasonal Influenza Vaccines |
HPV Therapeutic |
Cervical Cancer |
Norovirus (in the United States) |
Annual Estimated Market Size |
More than |
|
|
|
|
The combined company will be led by a veteran management team - including Vaxart's Chief Executive Officer
MAXIMIZING THE VALUE OF AVIRAGEN
Your Board unanimously believes that the proposed merger with
Based on the valuations of a selected set of publicly traded vaccine companiesii, Vaxart's estimated potential valuation prior to the merger is approximately
Following completion of the transaction, Aviragen stockholders will own 40 percent of the combined company. This will provide all Aviragen stockholders the opportunity to participate in the significant upside potential that can be realized in the merger.
VAXART TRANSACTION IS THE RESULT OF AN EXTENSIVE REVIEW OF STRATEGIC ALTERNATIVES
In April of 2017, your Board announced that it would be conducting a process to review the Aviragen strategic alternatives. Your Board formed an independent transactions committee that evaluated a number of options, including a business combination or strategic merger, in-licensing clinical stage programs, acquisitions, liquidation and other transactions that would complement Aviragen's current assets.
Aviragen's independent financial advisor, Stifel, at the instruction of your Board, sent non-confidential materials to a total of 65 parties. Aviragen received indications of interest from 16 parties, including
As part of this process, your Board also reviewed and analyzed the liquidation value of Aviragen. It was determined that, compared to other unrealistic estimates that have been previously assumed by others, the realistic liquidation value of Aviragen was estimated at only
Taking all of these factors into account, your Board - at the recommendation of the transactions committee - ultimately accepted Vaxart's offer as Aviragen's directors unanimously agreed that it was in the best interest of all of the Company's stockholders.
AVIRAGEN QUESTIONS THE TRUE MOTIVES OF THE CAS GROUP AND ITS SELF-SERVING CAMPAIGN
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The CAS Group demonstrates a lack of understanding of Aviragen's business and the biotechnology industry: The proxy statement filed by theCAS Group with theU.S. Securities and Exchange Commission ("SEC") contained numerous factual errors and demonstrated a fundamental lack of understanding about Aviragen,Vaxart , the pharmaceutical industry and biotechnology companies.
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The CAS Group has no alternative plan to the merger:The CAS Group has not provided you with any value creating alternative to the proposed merger withVaxart . All they suggest is that they will also explore "strategies", which will dissipate the Company's cash resources and make your investment in Aviragen less valuable. Your Board believes this represents an attempt by theCAS Group to take control of Aviragen without appropriately compensating all Aviragen stockholders and asks that you question whether the CAS Group's interests are the same as yours.
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Digirad has a track record of value destruction: Since its current CEO was appointed on
September 1, 2014 , Digirad's share price has declined from$3.61 per share to its current price of$2.65 per share. This current share price represents a decline of more than 58 percent from Digirad's peak share price over the last five years. Further, in the spring of 2017, Digirad conducted a campaign to replace directors at Birner Dental Management Services ("BDMS"). Since Digirad's nominees joined the BDMS board, BDMS's share price has fallen by more than 40 percent from$13.50 to$8.00 iv. Is there any reason why you would want the CAS Group's nominees who have been backed by the poor-performing Digirad to run your company?
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Digirad's role in the
CAS Group should be questioned: Digirad is a publicly traded company that is spending more than$100,000 of its corporate funds on legal and other fees related to its proxy solicitation for a total investment in Aviragen of approximately$681 , including broker commissions. Both Aviragen and Digirad stockholders should question why Digirad would spend such significant amounts of its stockholders' money in this campaign with an investment of only$681 . You have to question whether there are undisclosed financial arrangements among theCAS Group , which could violate securities laws.
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Digirad's Chairman of the Board,
Jeffrey Eberwein , has a history of securities laws violations: TheSEC found thatMr. Eberwein violated securities laws by depriving investors "of key facts needed to make informed decisions" during a series of activist campaigns.Mr. Eberwein and his hedge fund, Lone Star Value Management, paid a fine of$210,000 and agreed to a cease and desist to settle those chargesv. Would Aviragen stockholders want their company to be under the control of people who have settled multiple charges of securities laws violations?
VOTE FOR THE PROPOSED MERGER WITH VAXART TODAY
EACH VOTE IS IMPORTANT
Each vote is extremely important, no matter how many or how few shares are owned. The affirmative vote of the holders of a majority of the shares of Aviragen common stock properly cast at the Aviragen Special Meeting, presuming a quorum is present, is required to approve the proposed merger. Aviragen stockholders of record at the close of business on
If you have any questions or need assistance voting your shares you should contact Aviragen's proxy solicitor,
On behalf of your Board of Directors, we thank you for your continued support. We are confident that the proposed merger with
Sincerely,
/s/ /s/
Russ Plumb Joseph Patti, PhD
Chairman Chief Executive Officer
Advisors
About
Aviragen Therapeutics® is a registered trademark. Relenza® is a registered trademark of GlaxoSmithKline Pharmaceuticals, Ltd., and Inavir® is a registered trademark of Daiichi Sankyo Company, Ltd.
Forward Looking Statements
This press release contains forward-looking statements about
Additional Information About the Merger and Where to Find It
In connection with the proposed strategic merger, Aviragen and
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
Aviragen and
Contacts
Executive Vice President and Chief Financial Officer
(678) 221-3381
mcolonnese@aviragentherapeutics.com
Stern Investor Relations, Inc.
(212) 362-1200
beth@sternir.com
(212) 232-2247
Finsbury
(646) 805-2855
i Based on Aviragen's closing share price on
ii Financial detail per FactSet, as of 1/9/2018. Note: equity values are calculated using basic shares outstanding.
iii Based on Aviragen's closing share price on
iv Based on Birner Dental Management Services' closing share prices on
v Corrected Order Instituting Cease-and-Desist Proceedings In the Matter of
dated
A photo accompanying this announcement is available at: http://www.globenewswire.com/NewsRoom/AttachmentNg/7a21bcac-01c3-4c33-8add-63b6ac608a00
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