GENEVA--(BUSINESS WIRE)--Lucien Selce, who owns approximately 2.2% of the outstanding shares of Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH) (“Aurinia” or the “Company”), today issued the following letter to Aurinia shareholders:
June 3, 2024
Fellow Shareholders,
Ahead of Aurinia’s June 14 Annual General Meeting (“AGM”), I am writing to share my concerns regarding the Board of Directors’ (the “Board”) anti-shareholder actions and CEO Peter Greenleaf’s outsized influence over the current directors.
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Aurinia’s Board has maneuvered to entrench and further enrich itself at the expense of shareholders.
I believe that the date of the AGM was voluntarily delayed compared to last year. This appears to have been done to allow vesting of a batch of options and restricted share units (“RSUs”) before the AGM. These options and RSUs would have been lost if the AGM was held on an earlier date and if the current directors were not reelected.
Also, I find it highly suspicious that Aurinia’s proxy statement for the AGM was released after the “cut-off” date set by the Company for shareholders to be able to vote their shares. The Board knows very well that a number of shares are held through derivative contracts, which do not allow voting of the underlying shares. The Board also knows that, with sufficient notice, holders of such contracts can arrange to turn these contracts into physical shares in time to hold them to vote at the AGM. By acting the way it did, the Board has deprived certain holders from voting their shares. This is unethical and dishonest.
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A leading proxy advisory firm, Institutional Shareholder Services Inc. (“ISS”), has recommended that shareholders withhold support for three directors: Daniel Billen, R. Hector MacKay-Dunn and Brinda Balakrishnan.
In addition to recommending shareholders withhold support for these three directors, ISS also recommended shareholders vote against Aurinia’s proposed executive compensation. In its report, ISS noted the Board’s compensation committee “demonstrated poor responsiveness to shareholder concerns following last year’s failed say-on-pay support.”1
Last year, ISS recommended that shareholders vote for the Board. One year later, Aurinia’s stock languishes at $5.42,2 down from $10.713 on the day of the 2023 AGM.
Given this level of value destruction and the governance and strategic issues that currently plague the Company, I believe shareholders should go a step further and withhold support for the entire Board, including – most importantly – Mr. Greenleaf.
I believe it is impossible to justify supporting a CEO and directors that have overseen significant operational and stock underperformance, while at the same time diluting said shareholders to grant themselves ever larger quantities of stock-based compensation.
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Shareholders should be concerned about Armistice Capital’s relationship with Mr. Greenleaf.
I have observed that, as of March 31, 2024, Armistice Capital (“Armistice”) added 2.72 million shares, positioning itself as the largest shareholder of the Company.
It has come to my attention that Armistice believes that Mr. Greenleaf’s interests are aligned with shareholders’ and that Armistice will support both the Board and management team at the upcoming AGM.
It is common knowledge that Armistice was an investor in Mr. Greenleaf’s previous companies and has ties to him. It is my view that given the timing of Armistice’s stake increase, the firm is acting in cahoots with Mr. Greenleaf, as a quid pro quo for who knows what! The rest of Aurinia’s shareholders should be very concerned about this.
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There is a superior path for Aurinia and its shareholders.
If shareholders vote against the reelection of the incumbent Board, I intend to propose a slate of new directors to replace the current Board. In order to select candidates that fully represent the best interests of all shareholders, I intend to consult with ILJIN SNT Co., Ltd., a long-term shareholder of more than 5% of Aurinia.
I have also been in touch with an investment bank that is very active in the biotech space and is highly familiar with Aurinia and Mr. Greenleaf. From my exchanges with the firm, as well as based on his track record of value destruction, I am now convinced that removing Mr. Greenleaf is the first step to rejuvenating Aurinia and resurrecting its stock price.
There is a highly performing team, who successfully developed and sold a mid-sized biotech company that is willing and able to step in should the Board remove Mr. Greenleaf as CEO.
The investment bank is also willing and able to assist with implementing a new strategy, and has expressed its confidence that, without Mr. Greenleaf, Aurinia remains an attractive target for a buyer.
I urge the Board to embrace the solutions I have proposed to improve Aurinia’s performance, governance and future strategy.
If the Board is successfully voted off at the AGM, I will provide more details regarding the suggested path forward for Aurinia.
Sincerely,
Lucien Selce
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1 |
Permission to quote ISS was neither sought nor obtained. |
2 |
As of market close on May 31, 2024. |
3 |
As of market close on May 17, 2023. |