Avid Bioservices Inc (CDMO)

[jakedogman1]

Ronin crew plus Tappan had the votes for proxy IMO.

SK has value w/ respect to IP sale (unless he was lying on the interest). I believe there is interest in the IP.

The old BOD had zero incentive to do any deal because it would take away the gravy train. Remember the DS settlement where the old BOD agrees to cap their pay at a measly $400k per year. Why would DP walk away from a gravy train of $400k per year with 41 shares?

And look at the change of control parachutes... three years of bloated pay to SK and crew..

The old regime did not expect to get booted. Read the following from proxy materials.

The moat was breached and sides were taken. Heads must roll.

http://ir.avidbio.com/secfiling.cfm?filingID=921895-17-2252&CIK=704562

The following is a chronology of events leading up to this proxy solicitation:

· On January 17, 2017, Stephen White visited Peregrine’s offices in Tustin, California for a facility tour and also met with certain members of the Company’s management team, including President, Chief Executive Officer and director Steven W. King and Chief Financial Officer Paul J. Lytle.
· On January 23, 2017, Mr. White had a follow-up telephone call with Mr. Lytle. During the call, the parties discussed, among other things, Peregrine’s contract development and manufacturing business, Avid Bioservices, Inc. (“Avid”).
· On February 7, 2017, Mr. White visited Peregrine’s offices in Tustin, California for an additional facility tour. During his visit, Mr. White met with Jon Gingrich, Manager of Business Development for Avid, and John Haney, Senior Project Manager for Avid.
· On March 2, 2017, certain members of Ronin filed their initial Schedule 13D with the Securities and Exchange Commission disclosing beneficial ownership of approximately 8.2% of the outstanding shares of Common Stock.
· On March 9, 2017, Mr. White sent an e-mail to Messrs. King and Lytle regarding the recent Schedule 13D filing and giving background information on certain members of Ronin. Mr. White also requested a call between representatives of Ronin and the Company.
· On March 10, 2017, certain members of Ronin filed a Schedule 13D amendment disclosing beneficial ownership of approximately 9.4% of the outstanding shares of Common Stock.
· On March 20, 2017, Mr. White sent an e-mail to Messrs. King and Lytle regarding topics of discussion for an upcoming call between the parties, including Ronin’s concerns about the significant dilution experienced by Peregrine’s stockholders and the Company’s poor corporate governance practices.
· On March 27, 2017, representatives of Ronin engaged in a telephone conversation with Messrs. King and Lytle. During the call, representatives of Ronin expressed their concerns regarding the Company’s strategic direction and the Company’s poor corporate governance practices. Mr. King suggested that representatives of Ronin share their concerns at the next Board meeting.
· On April 12, 2017, the Company disclosed that it had received a letter from NASDAQ stating that the Company had not regained compliance with the $1.00 minimum closing bid price requirement under NASDAQ rules. The letter further stated that the Company’s securities would be delisted from NASDAQ on April 20, 2017 unless the Company requested a hearing by April 18, 2017 to appeal the decision. The Company disclosed that it intended to timely request such a hearing and was considering several paths to regain compliance with the minimum closing bid price requirement, including a reverse stock split.
· On April 13, 2017, Mr. White sent an e-mail to Messrs. King and Lytle inquiring about the reverse stock split that was approved at the 2016 annual meeting of stockholders (the “2016 Annual Meeting”) but had yet to be effected. Mr. White also asked about the timing of the next Board meeting pursuant to Mr. King’s prior suggestion that representatives of Ronin share their concerns at the next Board meeting.
· On April 17, 2017, certain members of Ronin filed a Schedule 13D disclosing beneficial ownership of approximately 6.1% of the outstanding shares of the Company’s 10.50% Series E Convertible Preferred Stock, $0.001 par value per share (“Series E Preferred Stock”).
· On April 19, 2017, representatives of Ronin engaged in a telephone conversation with Messrs. King and Lytle. During the call, representatives of Ronin expressed additional concerns regarding the Company, including, among other things, the continued service of Carlton M. Johnson Jr., David H. Pohl and Eric S. Swartz as directors of the Company. During the call, Mr. King suggested a potential sale of all or a portion of Avid as a strategic option, to which Ronin expressed strong disapproval. Mr. King also informed the representatives of Ronin that they would not be permitted to speak at the next Board meeting.
· On April 21, 2017, Ronin delivered a private letter to the Board. In the letter, Ronin reiterated its disapproval of any potential sale involving Avid, made clear that it would vehemently oppose any such proposed transaction and cautioned the Board against attempting to structure a transaction in a manner that would not require stockholder approval. Ronin also expressed its belief that the Board must be reconstituted to ensure that the best interests of stockholders are appropriately represented in the boardroom. Ronin advised the Board that it had identified several highly qualified independent director candidates and requested an opportunity to discuss Ronin’s concerns and potential candidates with the Board. Ronin concluded the letter by informing the Board that it desires to maintain an open, constructive and collaborative dialogue with the Board; however, to the extent that an amicable resolution cannot be reached, Ronin will not hesitate to take all actions it believes are necessary to protect the best interests of all Peregrine stockholders.
· On April 28, 2017, representatives of Ronin engaged in a telephone conversation with Messrs. King and Lytle. During the call, representatives of Ronin reiterated their concerns about the Company’s corporate governance, particularly the continued service of Messrs. Johnson, Pohl and Swartz as directors, and provided information regarding such non-employee directors that has caused Ronin to question their fitness to serve as directors of the Company. Mr. King claimed that he was unfamiliar with the outside business dealings of the non-employee directors that gave rise to Ronin’s concerns. Mr. King also relayed that it was the Board’s belief that it was premature to discuss changes to the composition of the Board.
· On April 30, 2017, Mr. White received an e-mail from Mr. King suggesting that the parties enter into a confidentiality agreement to enable the sharing of information regarding the Company’s strategy. Mr. White indicated that Ronin would be willing to discuss entering into such an agreement.
· On May 1, 2017, Mr. White sent an e-mail to Mr. King expressing Ronin’s belief that there is no justification for Messrs. Johnson, Pohl and Swartz to remain as directors of the Company. Included with the e-mail was a courtesy copy of a letter explaining Ronin’s numerous concerns with the Company that Ronin advised it intended to make public should the members of the Board be unwilling to discuss changes to the composition of the Board.
· On May 2, 2017, Mr. White received a draft confidentiality agreement from Mr. King.
· On May 3, 2017, Mr. White informed Mr. King that, due to Ronin’s serious concerns regarding the Company’s corporate governance and its strong belief that changes are required to the composition of the Board, Ronin is unwilling to enter into a confidentiality agreement that could jeopardize its ability to effectively seek to make the changes that it believes are necessary to improve Peregrine for the benefit of all stockholders.
· On May 4, 2017, Mr. King sent an e-mail to Mr. White requesting that Ronin reconsider its position with respect to entering into a confidentiality agreement.
· On May 5, 2017, Mr. White received an e-mail, in response to his May 1 st correspondence, from the non-employee directors of the Board indicating, among other things, that they are unwilling to discuss changes to the composition of the Board. Also on May 5, 2017, Mr. White sent an e-mail to the non-employee directors explaining Ronin’s belief that changes to the composition of the Board are necessary to create stockholder value and that stockholders would be receptive to the idea of change.
· On May 19, 2017, certain members of Ronin filed a Schedule 13D amendment disclosing beneficial ownership of approximately 7.5% of the outstanding shares of Series E Preferred Stock.
· On May 23, 2017, Ronin’s legal counsel (“Ronin Counsel”) sent a letter to Mark R. Ziebell, Peregrine’s Vice President, General Counsel and Corporate Secretary, requesting copies of the questionnaire and written representation agreement required to be submitted to the Company in connection with stockholder nominations of director candidates pursuant to the Company’s Bylaws. It was requested that such materials be provided by May 26, 2017.
· On May 30, 2017, Ronin Counsel sent a follow-up e-mail to Mr. Ziebell regarding the status of the May 23 rd request. Later on May 30, 2017, Ronin Counsel received copies of the requested questionnaire and written representation agreement from Peregrine’s legal counsel (“Company Counsel”).
· On June 7, 2017, the Company disclosed that NASDAQ granted the Company until July 21, 2017 to regain compliance with the $1.00 minimum bid price requirement, subject to certain conditions, including having a closing bid price of $1.00 or more for a minimum of ten prior consecutive trading days. The Company also disclosed that if the Company chooses to effect a reverse stock split in order to regain compliance with the minimum bid price requirement, it must do so no later than July 7, 2017 to meet such requirement.
· On July 7, 2017, the Company announced that a 1-for-7 reverse stock split of Common Stock would become effective at 5:00 p.m. Eastern Time on July 7, 2017.
· On July 12, 2017, Ronin Trading delivered a letter (the “Nomination Letter”) to the Company, in accordance with its Bylaws, nominating Gregory P. Sargen, Brian W. Scanlan and Saiid Zarrabian for election to the Board at the Annual Meeting.
· On July 13, 2017, Ronin issued a public letter to stockholders announcing the nomination of the Nominees. In the letter, Ronin explained its belief that there are opportunities to increase stockholder value at Peregrine; however, Ronin is concerned that stockholders will continue to suffer unless there is a change in strategy and the Board is reconstituted with directors willing to represent stockholders’ best interests. Specifically, Ronin called on the Company to immediately halt further clinical development spending on bavituximab (the Company’s immunotherapy drug candidate), monetize the intellectual property and then refocus on profitably growing Avid. Ronin also expressed its concerns with the poor corporate governance, apparent misalignment of interests and constant dilution that has persisted under the leadership of the incumbent Board and questioned the ability of the Company’s non-employee directors, Messrs. Johnson, Pohl and Swartz, to effectively oversee the Company.
· Also on July 13, 2017, the Company issued a press release acknowledging receipt of the Nomination Letter.
· On July 14, 2017, Ronin filed an amendment to its Schedule 13D disclosing the delivery of the Nomination Letter and the issuance of its July 13 th public letter.
· On July 20, 2017, Ronin issued a public letter to Peregrine’s employees in which it elaborated on its strategic vision and intentions with respect to the Company. Ronin made clear its belief that Peregrine should invest significantly more into Avid with a long-term view on its profitable growth and that Avid should no longer be used to prop up Peregrine’s failed clinical development business.
· On July 21, 2017, the Company disclosed an e-mail that Mr. King sent to employees of Peregrine in response to Ronin’s July 20 th public letter.
· On July 31, 2017, the Company issued a press release announcing its intention to increase the size of the Board from four to up to seven members through the addition of directors with relevant industry experience and also seek a dedicated President for Avid.
· On August 2, 2017, Ronin Counsel sent a letter to Company Counsel seeking confirmation regarding certain matters related to the Company’s July 31 st press release, including that the size of the Board had not been formally increased. Company Counsel provided the requested confirmation on the same day.
· On August 11, 2017, the Company issued a press release announcing certain cost cutting measures, including that it had terminated 20% of its employees.
· On August 14, 2017, Ronin issued a press release in response to the Company’s announcements on July 31 st and August 11 th . In the press release, Ronin expressed its outrage over the Board and management team choosing to fire roughly 20% of the Company’s employees while apparently doing nothing to address their own egregious compensation. Ronin also made clear that if Peregrine proceeds with the expansion of the Board, Ronin intends to timely nominate additional highly qualified director candidates to ensure that control of the Board does not remain with the incumbents or their hand-picked additions