How does Knight recommend I vote?
The Board of Directors is recommending that shareholders vote in the following manner on the BLUE proxy:
- FOR the following directors:
- James C. Gale
- Jonathan Ross Goodman
- Samira Sakhia
- Robert N. Lande
- Sylvie Tendler
- Nancy Harrison
- Michael J. Tremblay
- FOR the appointment of Ernst & Young LLP as auditors
- FOR the approval of the Advance Notice By-Law
- FOR the re-approval of the employee stock purchase plan
- AGAINST the approval of a new By-Law No. 3
In addition, Tzalir Holdings Ltd., a corporation privately held by Mr. Jakobsohn, has a contractual right to nominate one director at all meetings of shareholders of the Corporation where directors are elected. The Corporation is therefore contractually required to nominate Mr. Jakobsohn him as part of Knight’s slate of directors. As a result, the persons named as proxies in the enclosed form of proxy intend to vote the Common Shares represented by such proxy in favour of the election of Mr. Jakobsohn to the Board, unless the shareholder granting this proxy has indicated that his or her shares are to be voted otherwise.
What is Medison Biotech (1995) Ltd. and how are they linked to Mr. Jakobsohn and Knight?
In 2015, Medison and Knight formed a strategic collaboration in which the companies joined forces in their respective missions to bring innovative treatments to patients in Canada, Israel and Romania. To solidify the partnership, upon the closing of the transaction, each company became a significant shareholder of the other. Specifically, Knight received a 28.3% equity interest in Medison in exchange for approximately a 10.0% equity interest in Knight. Jonathan Ross Goodman, President and CEO of Knight, joined Medison’s Board of Directors while Meir Jakobsohn, Founder and CEO of Medison, joined the Knight Board of Directors.
Why is Mr. Jakobsohn seeking to reconstitute the board?
Unfortunately, Mr. Jackobsohn is threatening to disrupt our positive momentum and put your investment at risk for his own personal gain.
In 2018, Mr. Jakobsohn requested a separation. Despite our attempts to privately negotiate a fair separation agreement in good faith, Mr. Jakobsohn’s offers included terms which would have had Knight shareholders suffer a significant financial loss and Mr. Jakobsohn enjoy a significant gain.
Shortly after Knight rejected Medison’s one-sided separation terms, Mr. Jakobsohn decided to engage in an activist campaign. Despite Mr. Jakobsohn’s assertions to the contrary, we believe that this activist campaign is an attempt to increase Medison’s negotiation position and to force Knight to enter into a transaction with Medison on terms which are not in the best interest of Knight.
During the Fall of 2018, on the heels of Knights’ refusal to accept Medison’s separation terms, Mr. Jakobsohn began asserting for the first time that the strategy he had endorsed during his 3 year tenure as a director was now flawed.
Using arbitrary and selected metrics, he made unsubstantiated critiques about Knight’s performance. He also asserted for the first time during his 3 years tenure that the board’s decision-making process was flawed, and raised allegations of conflicts based on facts which are well known and had been disclosed when Knight became a publicly traded corporation. He further made gratuitous attacks on various members of the board, including directors whose nomination he had previously approved.
Mr. Jakobsohn requested that he be appointed as chairman of a strategic committee which would implement his ideas. Then in December, Mr. Jakobsohn requested that he be appointed as executive chairman of the board, and that Medison, despite holding 7% of Knight’s shares, nominate the majority of the board. Mr. Jakobsohn did not provide any names of potential director.
Medison also refused to pay a dividend it was contractually obligated to pay and only relented from this tactic under threat of legal action.
Faced with this conduct, we have attempted to maintain an open and constructive dialogue. We have also made clear that we would consider in good faith proposals which are genuinely for the benefit of Knight and all of its stakeholders. Over the past several months, we have repeatedly invited Mr. Jakobsohn to present his plan during a working session to which our full board would participate. He systematically refused to do so for months.
Instead of constructively presenting his ideas, Mr. Jakobsohn decided to send criticisms and suggestions moments before board meetings, which he refused to attend in person. Mr. Jakobsohn’s disruptive attitude and conduct currently prevents the board from focusing on growing Knight’s business.
Mr. Jakobsohn only agreed to present his ideas during a board meeting held on March 13, 2019. This was the first time the board had seen the ideas that he has now made public. The board expressed the desire for a continuing dialogue but rather than engaging with the board, he released his plan publicly the day after the board meeting.
Regrettably, rather than engaging constructively with the board, Mr. Jakobsohn has chosen to wage a public campaign which we believe is aimed at pressuring the board to agree to terms that are not in the best interest of Knight’s shareholders.
What is Meir’s strategy moving forward?
Mr. Jakobsohn has publicly stated that he intends to nominate a slate of directors. However, he has been slow to attract and name nominees, so we are unable to comment on the qualifications of each. What we do know, is that they are being recruited to implement a scheme that will be good for Mr. Jakobsohn, not you as a shareholder.
Mr. Jakobsohn’s agenda for Knight is a discombobulated scheme that clearly illustrates that he does not fully grasp of important aspects of our business, including the complex regulatory issues, industry margins, and specialty pricing.
Mr. Jakobsohn’s plan just doesn’t make sense. Primarily, Mr. Jakobsohn endorses a rest of world strategy – something we are already pursuing. But while we have a disciplined approach to secure licensing and strategic partnerships in Latin America, the Middle East and Africa, Mr. Jakobsohn’s wants a significant amount of our money to gamble on high-risk early-stage biotech products. While Knight is not averse to early stage products, Knight will not make high risk or binary bets that put your money at risk and allow Medison to benefit from any upside on licensing agreements for Israel.
Adding any of Mr. Jakobsohn’s nominees to Knight’s Board would derail the successful path we are on, destroy value, and is not in the best interests of Knight shareholders.
Could this public fallout have been avoided?
Yes. Knight has attempted to maintain an open and constructive dialogue with Mr. Jakobsohn and, over the past several months, has repeatedly asked him to provide the Corporation with a presentation outlining his views about the Corporation’s strategy and opened the door for him to present to his fellow directors in person. Unfortunately, it was not until the morning of Wednesday, March 13, 2019, that such a presentation was provided on short notice before a scheduled Board meeting. Despite the limited time the Board had to consider the presentation, it operated in good faith to engage Mr. Jakobsohn in a constructive dialogue in an effort to identify avenues of cooperation that would be mutually beneficial. Following Mr. Jakobsohn’s presentation, the Board expressed the desire of continuing their dialogue and asked about next steps. The Board is therefore disappointed by Mr. Jakobsohn’s public release of his presentation and elimination of private discussions. It appears that rather than pursuing a meaningful attempt to find a mutually agreeable outcome, Mr. Jakobsohn’s presentation is nothing more than a self-serving proxy fight tactic.
What is Knight’s strategy moving forward?
At Knight, we never rest. Jonathan Ross Goodman founded our company with a vision to build a leading specialty pharmaceutical company in Canada and select international markets, to make a meaningful difference in the lives of patients, and, in the process deliver healthy returns to our shareholders.
Our team is delivering on these goals.
In the five short years since Knight was founded, we’ve come a long way. We’ve generated an impressive $219 million of net income, raised hundreds of millions of dollars at increasing valuations, made smart acquisitions, and developed and in-licensed a promising pipeline of innovative products.
Since our launch in 2014, Knight has:
- Raised $685 million at increasing valuations ($3.50, $5.25, $6.75. $8.00, $10.00 per share)
- In-licensed over 20 innovative pipeline products from over a dozen companies
- Received FDA approval for Impavido® in March 2014 and sold Priority Review Voucher for US$125M
- Acquired NeurAxon Inc. and the Neuragen brands
- Sold or out-licensed rights to Neuragen, Impavido, and NeurAxon
- Lent over $170m to 15 strategic loan partners generating double digit returns
- Generated $219m of net income to date (as at Dec. 31, 2018)
- Selectively rolling out a Rest of the World licensing strategy with lending of up to US$25 million (as well as up to an additional US$100 million) to Mexico and Brazil based Moksha8
Our strategy is working as further evidenced by our financial strength: in 2018, year over year revenue and net income increased by 45% and 40% respectively and, as at December 31, 2018, Knight had over $787 million in cash, cash equivalents and marketable securities.
We’re not resting on our laurels.
With our strong balance sheet, we will focus on growth through in-licensing of pharmaceutical products for Canadian and select international markets. In addition, we continue to explore corporate acquisitions but will only execute at a fair price.
We will also continue to pursue strategic loans and equity investments to secure rights to innovative pipeline assets, including early stage products, and we’re advancing our rest-of-world strategy, identifying the right strategic partners in Latin America, the Middle East and Africa.
We believe that this proven, responsible and disciplined strategy best positions us to maximize shareholder value, in both the short and long term.
Why is Meir still listed as part Knight’s slate of directors?
In addition, Tzalir Holdings Ltd., a corporation privately held by Mr. Jakobsohn, has a contractual right to nominate one director at all meetings of shareholders of the Corporation where directors are elected. We are therefore contractually required to nominate Mr. Jakobsohn as part of Knight’s slate of directors.
What is the Proposed Dissident By-Law?
The Proposed Dissident By-Law is an attempt to disqualify Jonathan Ross Goodman from acting as the Chief Executive Officer of the Corporation because of Mr. Goodman’s indirect, passive interest in Pharmascience. It seeks to have Mr. Goodman divest of his interest in Pharmascience, or step down as CEO of the Corporation. In reality, this interest does not put Mr. Goodman in a position of conflict as CEO of the Corporation.
The first option is not viable, and Mr. Jakobsohn knows that. Mr. Goodman is a minority shareholder in a family holding company which holds a wide portfolio of assets including the shares of Pharmascience. First, there is no market for the shares of this family holding company, and second, a divestiture by Mr. Goodman of his indirect interests in Pharmascience would require Pharmascience to be sold outright. Mr. Goodman has no direction or control over the family holding company nor of Pharmascience and so does not have the right or ability to cause such a divestiture.
Curiously, the Proposed Dissident By-Law stops short of disqualifying directors that have a material financial interest in a competitor of the Corporation, likely because such a prohibition would prevent Mr. Jakobsohn from acting as a director. In fact, Medison, a company that is controlled and directed by Mr. Jakobsohn, competes with Knight in Israel and thus, ironically, it is actually Mr. Jakobsohn who is in conflict.
Do not be confused. The Proposed Dissident By-Law is a tool used by Mr. Jakobsohn as part of his campaign to gain access to Knight’s capital and use it to make high risk bets with shareholder money. For this reason, and for all of the reasons stated above, the board and management strongly recommend that shareholders vote against the proposal.
Why Submit the Proposed Dissident By-Law to Shareholders?
Notwithstanding the fact that the Corporation (i) is within its legal rights to refuse to include the Proposed Dissident By-Law in this Circular due to the fact that it was proposed more than two months after the deadline to make such proposals, (ii) does not believe that adopting the Proposed Dissident By-Law is in the best interests of the Corporation or its shareholders ,(iii) does not believe that the Proposed Dissident By-Law will garner support from shareholders, and (iv) views the Proposed Dissident By-Law as a distracting self-serving tactic, it has still been included in this Circular.
Why? Because while the Corporation views the Proposed Dissident By-Law as yet another in a long line of tactics being used by Mr. Jakobsohn to advance his self-serving personal agenda, it also wishes to give its shareholders the final say. Shareholders should have the opportunity to address these tactics with their vote.
What is Jonathan Goodman’s association with Pharmascience?
Mr. Goodman is an indirect, passive minority shareholder in Pharmascience. Decisions at Pharmascience are completely isolated from Mr. Goodman and he provides zero input. Mr. Jakobsohn’s allegations of conflict of interest regarding Mr. Goodman and Pharmascience – a business run separately by Mr. Goodman’s father and brother – are no more than a red herring that insults the intelligence of Knight’s shareholders, who are aware that Mr. Goodman has competed against Pharmascience since 1996 and will continue to do so to ensure Knight is successful. Mr. Goodman decided decades ago to chart his own course in the pharmaceutical business, one that is separate from his family, and that decision has served Knight shareholders well. Mr. Goodman participated in all 5 Knight equity financings and personally invested over $70 million at increasing valuations into Knight.
What is being done to address concerns about Mr. Goodman’s interest in Pharmascience?
Despite the fact that the Corporation does not view Mr. Goodman’s indirect passive interest in Pharmascience as a conflict, the Corporation, as well as Mr. Goodman, value the views of shareholders. For this reason, the mere suggestion that a conflict could exist has been a call to action for Mr. Goodman. On March 29, 2019, Mr. Goodman entered into a blind voting trust agreement in respect of the shares that he holds in his family holding company. As part of this agreement, Mr. Goodman has relinquished all right to vote his shares. Moreover, the blind voting trust agreement establishes a firewall whereby any information concerning Pharmascience to which an indirect shareholder may otherwise have access, is not accessible to Mr. Goodman. While factually speaking, Mr. Goodman has not been involved in any decision making at Pharmascience, the blind voting trust agreement insures that he will have no knowledge of any information relating to Pharmascience that is non-public. While the Corporation does not believe that this step is strictly necessary, it views this measure as a further demonstration of Mr. Goodman’s singular focus on the success of Knight.
What if I can’t attend the Meeting in person?
It is recommended that you vote your shares in advance of the Meeting even if you intend to attend the Meeting. Please complete, sign, date and return the BLUE Proxy, whether or not you plan to personally attend the Meeting. Sending your proxy will not prevent you from voting in person at the Meeting. Beneficial shareholders must appoint themselves to vote their shares in person at the Meeting.
Who is entitled to vote at the Meeting?
All shareholders as of the close of business on the Record Date, March 14, 2019.
Who is soliciting my proxy?
The solicitation of proxies by this Circular is being made by or on behalf of the management of the Corporation. The Corporation has also engaged Kingsdale Advisors as its Proxy Solicitation Agent and Strategic Shareholder Advisor. You may contact Kingsdale with any questions, or for assistance in voting your shares, at 1-888-518-1552 or firstname.lastname@example.org. Knight may utilize the Broadridge QuickVote service to assist Non-Registered Shareholders with voting their Common Shares over the telephone. Alternatively, Kingsdale Advisors may contact such Non-Registered Shareholders to assist them with conveniently voting their Common Shares directly over the phone.
When must my shares be voted by?
The proxy cut-off is set for 5:00 p.m. EST on May 3, 2019. The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting at his or her discretion, without notice.
How many shares are eligible to vote?
As of the Record Date, there were a total of 142,850,512 Common Shares issued and outstanding, each carrying the right to one (1) vote at the Meeting. No group of shareholders has the right to elect a specified number of directors. There are no cumulative or similar voting rights attached to the Common Shares.
Who will tabulate the votes?
AST Trust Company (Canada), the Corporation’s Transfer Agent, will act as the tabulator for the Meeting.
How do I appoint someone else to vote for me?
If you intend to attend the Meeting in person, or have someone attend in your place, you must write their name on the Appointee field. In order for your shares to be voted, the Appointee must attend the Meeting in person, and check-in at the scrutineers’ table with government-issued photo ID.
What if I want to change my vote or revoke my proxy or voting instruction form?
You have the right to change or revoke your vote up until the proxy cut-off. If you have mistakenly voted on the other proxy card, you may change your vote by voting on the BLUE proxy card. This will revoke and replace your earlier cast vote. If you require assistance in doing so, please contact Kingsdale Advisors at 1-888-518-1552 or email@example.com.
Who should I contact for more information or assistance in voting my shares?
Kingsdale Advisors is the Corporation’s Proxy Solicitation Agent and can assist you with any questions related to this Meeting. You can contact them at 1-888-518-1552 or firstname.lastname@example.org.
How do I vote?
Voting for Registered Shareholders
- By completing, dating, signing, and returning your BLUE form of proxy by Mail to:
AST Trust Company (Canada)
Attention: Proxy Department, P.O. Box 721,
Agincourt, Ontario, M1S 0A1
- Internet Vote: Use 13-digit control number on the form of proxy to vote at www.astvotemyproxy.com
- Telephone Vote: 1.888.489.7352 (English and French)
- Facsimile Vote: 416.368.2502 or 1.866.781.3111
- Email: Scan and email to email@example.com
- In Person at the Meeting.
Voting for Canadian Beneficial Shareholders
- Telephone Vote: 1.800.474.7493 (English) or 1.800.474.7501 (French)
- Facsimile Vote: 905.507.7793 or 1.866.623.5305
- Internet Vote: www.proxyvote.com (enter your 16-digit control number)
Voting for US Beneficial Shareholders
- Telephone Vote: 1.800.454.8683
- Internet Vote: www.proxyvote.com (enter your 16-digit control number)
If you have any questions or need assistance in casting your vote, please call Kingsdale Advisors at 1-888-518-1552 or email at firstname.lastname@example.org.
There is a team standing by to help.