CHICAGO, July 20, 2017 /PRNewswire/ -- Ronin Trading,
LLC and SW Investment Management LLC (together with the other
participants in their solicitation, "Ronin"), collectively the
second largest stockholder of Peregrine Pharmaceuticals, Inc.
("Peregrine" or the "Company") (NASDAQ: PPHM), with aggregate
beneficial ownership of approximately 8.7% of the Company's
outstanding shares of common stock, today issued a letter to
Peregrine's employees. In the letter, Ronin elaborated on its
intentions with respect to the Company following the announcement
of its nomination of Gregory P.
Sargen, Brian W. Scanlan and
Saiid Zarrabian for election to the
Company's Board of Directors at the Company's upcoming 2017 annual
meeting of stockholders. The full text of the letter follows:
July 20, 2017
Dear Peregrine Employees:
Ronin Trading, LLC and SW Investment Management LLC (together,
"we") believe it is important that you understand a little more
about us and what we are attempting to accomplish with our
nominations of Gregory P. Sargen,
Brian W. Scanlan and Saiid Zarrabian for election to the Board of
Directors (the "Board") of Peregrine Pharmaceuticals, Inc.
("Peregrine" or the "Company") at the Company's upcoming 2017
annual meeting of stockholders. As detailed in our public letter to
stockholders dated July 13, 2017, we
believe that the Company is suffering from mismanagement under the
leadership of the incumbent Board that is comprised of egregiously
compensated directors who lack relevant experience, possess an
immaterial financial interest in the Company and have histories of
losses and questionable dealings outside of Peregrine.
Rather than capitalize on the emergence of Peregrine's contract
development and manufacturing business, Avid Bioservices, Inc.
("Avid"), the incumbents have elected to use Avid to support the
unsuccessful development of bavituximab. We believe this is a
mistake and that the Company and all of its stakeholders –
stockholders, employees and customers – would benefit from a focus
on Avid.
We want to invest more capital in Avid. We believe Peregrine
should invest significantly more into Avid's people, capacity and
technology – the only investments to date that have created value
for Peregrine. Because of Avid's high return on capital, excellent
competitive position and great regulatory track record, we believe
that additional investment will create even more value. Meanwhile,
public and private market valuations for contract development and
manufacturing organizations ("CDMOs") remain very high, indicating
the future return potential for businesses such as Avid. Avid
should not be competing for capital with an unsuccessful drug
development program; instead, it desperately needs a structure
where it can invest for growth, free from the handicap of a
management team that forces it to prop up a failed clinical
development business.
Increased investment into Avid would also bring much-needed
comfort to Avid's customers and the Company's other stakeholders.
We appreciate how unsettling it is to see Peregrine's auditor raise
substantial doubt as to the Company's ability to continue as a
going concern. We are confident that these doubts would be
alleviated by focusing on profitably growing Avid and not diverting
resources to unrelated clinical development activities.
We want to attract and retain the best employees for Avid. We
genuinely appreciate that the value in CDMOs is as much (if not
more) about the people as it is about the physical assets. We want
Avid to attract and retain the best talent available, but that will
only be possible with the following changes. First, Peregrine needs
a vastly improved culture, which begins with directors and
management who possess relevant experience, successful track
records and a true appreciation for Avid's business. Avid can no
longer be treated as little more than a means to support extraneous
pursuits. Employees deserve strong commitments from a
knowledgeable, ethical management team that is focused on growing
Avid over the long-run. Second, incentive alignment is a critically
important element to the success of any organization. As such,
employees should be rewarded with better equity incentive
compensation, and this compensation should reflect the work they
do. This will only be possible if Peregrine immediately halts all
clinical development work and reorganizes so that the price of
Peregrine's stock is determined by the success of Avid rather than
the struggles of clinical development.
We are NOT unconditionally wedded to Peregrine's clinical
development activities. While we acknowledge that there are always
varying opinions on the prospects for any drug candidate, the
evidence against bavituximab is clear. Despite hundreds of millions
in R&D, this drug candidate has not produced any statistically
significant results showing improvement in cancer survival rates,
has no large partners and no identifiable quotes from key opinion
leaders. No amount of "excitement" over data mining from
Peregrine's current management changes these facts. We want an
independent and objective review of Peregrine's clinical
development activities, and we believe our director candidates are
highly qualified to undertake this review and run a monetization
process. However, it is critically important to understand that
regardless of anyone's opinion of Peregrine's clinical development
assets, the Company has NO ability to underwrite any further
R&D without simultaneously destroying the value of Avid. For
this reason alone, Peregrine must immediately halt all clinical
development R&D and cut the associated expenses.
We are NOT trying to sell the Company. We are not short-term
investors looking to make a quick buck. In fact, when President and
Chief Executive Officer Steven W.
King previously privately acknowledged to us that the
Company had considered selling all or a portion of Avid, we
expressed our strong disapproval of any such transaction and belief
that it would be contrary to the best interests of the Company and
its stockholders. Instead, we insisted that the best option was to
focus on taking a long-term view of Avid while managing Peregrine
far more sensibly. We reminded Mr. King that a sale of Avid would
require stockholder approval and cautioned against attempting to
structure a transaction in a manner that would not require
stockholder approval. We also explained to Mr. King that a spin-off
transaction would be effectively impossible because of Peregrine's
approximately $650 million tax-loss
carryforward asset and the fact that Peregrine's clinical
development has no ability to independently support its
operations.
We are NOT nominating ourselves to the Board. With the Company's
three non-employee directors collectively earning over $10 million in total compensation since the start
of fiscal year 2010 (not even including whatever they have received
since April 30, 2016), we believe the
incumbent directors are grossly overcompensated. We have no
interest in receiving this exorbitant compensation at the expense
of stockholders; rather, we want to profit with all other
stockholders, which is why we are seeking the election of highly
qualified, experienced and reputable candidates who believe will be
able to create value for all stockholders and bring stability to
the Company for its employees and customers. We fully expect that
director compensation will be appropriately adjusted downward once
new independent directors capable of acting in stockholders' best
interests are elected to the Board.
We are NOT "activist" investors. We have not nominated our
director candidates because it fulfills our investment strategy.
Even 13D Monitor, a research service specializing in shareholder
activism, recently noted that "Neither Ronin Capital nor SW
Investment (the "Group") are activist investors…" when
commenting on our involvement with the Company. Instead, we are
simply stockholders who saw a great opportunity to grow Peregrine
over the long-run, but realized that change was desperately needed
to address the Company's troubling corporate governance practices
and strategic miscues. We saw an excellent chance to create value
for all stockholders and send a resounding message that poor
corporate governance, mismanagement and anything less than the
highest ethical standards will no longer be tolerated at Peregrine.
We are here to provide a voice for frustrated stockholders and show
that there is a light at the end of the tunnel for the Company's
customers and employees.
Facing the stark reality that their lengthy tenure of
unjustifiably high compensation may be coming to an end, we caution
the incumbent Board members against taking any action to further
entrench themselves or otherwise to the detriment of the Company.
Any attempts by the incumbents to delay the upcoming annual
meeting, further enrich themselves or engage in a material
transaction without stockholder approval will not be tolerated. We
encourage you to let Mr. King and the other members of the Board
know that you feel the same way.
We look forward to disrupting the culture of entrenchment and
seeking the election of our highly-qualified independent
candidates, Gregory P. Sargen,
Brian W. Scanlan and Saiid Zarrabian, at the upcoming 2017 annual
meeting of stockholders.
Regards,
John S. Stafford III
RONIN TRADING, LLC
Stephen White
SW INVESTMENT MANAGEMENT LLC
CERTAIN INFORMATION CONCERNING THE
PARTICIPANTS
Ronin Trading, LLC, together with the other participants named
herein (collectively, "Ronin"), intends to file a preliminary proxy
statement and an accompanying proxy card with the Securities and
Exchange Commission ("SEC") to be used to solicit votes for the
election of its slate of three highly qualified director nominees
at the 2017 annual meeting of stockholders Peregrine
Pharmaceuticals, Inc., a Delaware
corporation (the "Company").
RONIN STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ
THE PROXY STATEMENT AND OTHER PROXY MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. SUCH
PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB
SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS
PROXY SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT
WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST.
The participants in the solicitation are Ronin Trading, LLC
("Ronin Trading"), John S. Stafford,
III, SWIM Partners LP ("SWIM Partners"), SW Investment
Management LLC ("SW Management"), Stephen
White, Gregory P. Sargen,
Brian W. Scanlan and Saiid Zarrabian.
As of the date hereof, Ronin Trading directly beneficially owned
3,310,651 shares of the Company's common stock, $0.001 par value per share ("Common Stock"),
including 137,260 shares of Common Stock that may be acquired upon
the conversion of 115,299 shares of the Company's 10.50% Series E
Convertible Preferred Stock, $0.001
par value per share ("Series E Preferred Stock"). Mr. Stafford, as
the Manager of Ronin Trading, may be deemed to beneficially own the
3,310,651 shares of Common Stock beneficially owned directly by
Ronin Trading. As of the date hereof, SWIM Partners directly
beneficially owned 469,308 shares of Common Stock, including 10,333
shares of Common Stock that may be acquired upon the conversion of
8,680 shares of Series E Preferred Stock. As of the date hereof, an
account separately managed by SW Management (the "SW Account") held
172,487 shares of Common Stock, including 3,714 shares of Common
Stock that may be acquired upon the conversion of 3,120 shares of
Series E Preferred Stock. SW Management, as the general partner and
investment adviser of SWIM Partners and the investment adviser of
the SW Account, may be deemed to beneficially own the 641,795
shares of Common Stock beneficially owned in the aggregate by SWIM
Partners and held in the SW Account. Mr. White, as the Manager of
SW Management, may be deemed to beneficially own the 641,795 shares
of Common Stock beneficially owned in the aggregate by SWIM
Partners and held in the SW Account. As of the date hereof, Messrs.
Sargen, Scanlan and Zarrabian did not beneficially own any
securities of the Company.
Investor Contact:
Stephen White
SW Investment Management LLC
(312) 765-7033
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SOURCE Ronin Trading, LLC and SW Investment Management LLC