BELLEVILLE, ON, June 12, 2013 /PRNewswire/ - Bioniche Life Sciences Inc. (TSX:
BNC) (ASX: BNC), a research-based, technology-driven Canadian
biopharmaceutical company, today issued an open letter to all
shareholders from Founder, President & CEO, Graeme McRae:
Dear Fellow Shareholders,
By now you have seen the many press releases accompanying the
requisition by Bill Wells and Greg Gubitz for a shareholders' meeting
to make changes to the Board of Directors (Board) of Bioniche. I am
writing to shareholders to set out the rationale for our Board's
response to Messrs. Wells and Gubitz.
Wells and Gubitz, through an intermediary, approached our Chairman Jim
Rae in August, 2012 on an unsolicited basis with a proposal to acquire
a controlling interest in our Animal Health business. They were backed
by a major U.S. private equity firm and laid out a plan to use our
Animal Health business as a consolidation vehicle, touting their
success at Biovail as something that could be duplicated with Bioniche
Animal Health. They assured us that they would never proceed on a
In the interest of maximizing shareholder value, we were open to
discussions with them, signed a non-disclosure and standstill
agreement, and shared strategic and highly confidential information.
In the end, we believed that the deal terms proposed were not in the
best interests of all shareholders. Having had access to confidential
information from which they learned the true value and potential of
Bioniche, we were shocked to see that they acquired a stake in the
Company from which to try and control the Board, contrary to their
assurances to us. More importantly, their public attacks are now
jeopardizing some very important initiatives underway to maximize the
Company's potential for the benefit of all shareholders.
The Bioniche Board Has a Plan to Unlock Value
Over the past few years, Bioniche's Board and management have laid a
solid foundation in three areas: Animal Health, which generates
positive EBITDA, Human Health, with a Phase III bladder cancer product,
and One Health, with the world's first registered cattle vaccine for E. coli O157 and a state-of-the-art vaccine manufacturing plant nearing GMP
The Board is fully aware of the value of the Company's assets and has
been evaluating the best alternatives to unlock that value. In the
summer of 2012, we began to explore alternatives with parties
interested in our Animal Health business, with a particular focus on
distribution rights and product sales. Through that process, our belief
that the business was valuable was reinforced by third party
confirmation, and the Board and management started considering a
potential sale of the Animal Health business.
Having received three written expressions of interest for our Animal
Health business, in addition to an expression of interest from Wells
and Gubitz, we engaged Evercore Partners on May 13, 2013 to manage the
divestment process. Evercore is a U.S.-based, premier independent
investment banking advisory firm with strong merger and acquisition
expertise. Following our announcement of the Evercore engagement,
Evercore has received a number of inbound enquiries from parties,
including many major global pharmaceutical companies. In addition to
the Animal Health business, bidders have also expressed interest in our
One Health division.
Nothing precludes Wells and Gubitz from participating in our divestment
process and we are prepared to treat them on equal terms with other
bidders as the process unfolds. Any proposed sale of Animal Health will
be subject to shareholder approval.
In December, 2012, we re-acquired global rights to our flagship Human
Health bladder cancer product, Urocidin, and we are well advanced in pursuing the regulatory pathway in Canada,
as well as in pursuing a strategy for global collaborations. We
recently announced the first such collaboration, licencing Urocidin to Paladin Labs Inc. for Canada, Mexico and South Africa as part of an
overall transaction where Paladin also provided debt and equity
The Wells/Gubitz Requisition
Contrary to their promise not to proceed on a hostile basis and armed
with undisclosed confidential information about our Animal Health
business, Wells and Gubitz publicly declared on April 19, 2013 that
they had acquired an approximately 5% interest in Bioniche (seven days
after expiration of their standstill obligations but still under
confidentiality obligations) and were seeking shareholder support to
change the Board. They declined the opportunity to meet with our
Chairman and followed up with a formal requisition for a shareholder
meeting to replace the existing Board.
We were very concerned that their actions could jeopardize the critical
initiatives that are underway. As a result, our Board:
(i) formed a Special Committee led by our Chairman, Jim Rae;
(ii) based on legal advice, concluded that the two requisitions are
each invalid and determined not to act on them; and
(iii) set our Annual Meeting in accordance with the regular schedule
for the first week in November, so that shareholders have time to make
informed decisions and the important initiatives underway are not
Going Forward - Human Health
Once the Animal Health and, potentially, One Health businesses are sold,
Bioniche will be a well-funded Human Health company. The expected
influx of cash associated with the sale of these assets is expected to
repay debt and provide the financial resources to commercialize Urocidin globally.
Since it was announced that we re-acquired global rights for Urocidin, more than 30 companies have expressed interest in licencing
arrangements in various jurisdictions. The Paladin deal is the first
tangible example of this interest.
We have assembled a team to best exploit these opportunities, and this
will be enhanced with the hiring of a CEO for the Human Health business
unit who will have global regulatory and commercialization experience.
We expect to report progress on this front and on the regulatory
pathway throughout the summer, particularly following the scheduled
meeting with Health Canada in late June, at which time we will discuss
the potential for an early Canadian registration under Health Canada's
Notice of Compliance with Conditions (NOC/c) policy.
The data package is impressive, our market analysis shows significant
revenue opportunities, and the manufacturing is in place. Management is
confident that the potential upside from Urocidin is significant.
Bioniche was founded in 1979 as an animal health company that would
develop proprietary technologies as alternatives to antibiotics in
livestock. We were fortunate to be able to transfer our core immune
stimulant technology from animal use to human use, which has become the
basis for Urocidin, our bladder cancer technology. With strong support from
veterinarians, local communities, governments and capital markets,
Bioniche has built a solid presence on the ground in Canada with 206
employees and significant asset values.
The capital markets clearly felt that our strategy of sacrificing
profitability for asset growth was unsustainable. So now is the time
to realize on the value that 34 years of investment has created. We
cannot allow these very important initiatives to be jeopardized.
In addition, as part of this process, it is appropriate that I
transition my role as well. With a new CEO for Human Health and the
Animal Health business divested, I plan to step back from my active
management role and offer my services as non-Executive Chairman.
Wells and Gubitz want to change the Board to keep Animal Health and get
rid of the rest of the Company's valuable assets. The Board believes
that a sale of the Animal Health business is in the best interests of
the Company and its shareholders.
Thank-you for taking the time to hear our side of the story. We
appreciate your support.
About Bioniche Life Sciences Inc.
Bioniche Life Sciences Inc. is a research-based, technology-driven
Canadian biopharmaceutical company focused on the discovery,
development, manufacturing, and marketing of proprietary and innovative
products for human and animal health markets worldwide. The
fully-integrated company employs more than 200 skilled personnel and
has three operating divisions: Human Health, Animal Health, and Food
Safety. The Company's primary goal is to develop and commercialize
products that advance human or animal health and increase shareholder
For more information, please visit www.Bioniche.com.
Except for historical information, this news release may contain
forward-looking statements that reflect the Company's current
expectation regarding future events. These forward-looking statements
involve risk and uncertainties, which may cause, but are not limited
to, changing market conditions, the successful and timely completion of
clinical studies, the establishment of corporate alliances, the impact
of competitive products and pricing, new product development,
uncertainties related to the regulatory approval process, and other
risks detailed from time to time in the Company's ongoing quarterly and
SOURCE Bioniche Life Sciences Inc.