Knight Therapeutics Inc. shareholders re-elected CEO Jonathan Goodman and the six other nominees he put forward to serve on the company’s board of directors after an activist who launched a proxy fight at the company withdrew his own nomination on the day of the vote.
After its annual general meeting on Tuesday, Montreal-based Knight announced that shareholders only elected one member of the slate of nominees put forward by Medison Biotech Ltd., an Israeli company that owns 7.3 per cent of Knight’s shares. Medison CEO Meir Jakobsohn withdrew his own nomination and those of four others on the slate Medison put forward minutes before the meeting began, according to Knight president Samira Sakhia. She said the reason Jakobsohn did so was because “people would’ve seen how embarrassingly low their numbers were.”
Kevin Cameron, the co-founder of shareholder advisory firm Glass Lewis, was the only member of the dissident slate to not have his nomination withheld — he was elected to the Knight board.
In an interview, Goodman said he was thankful for shareholder support. Going into the vote, Goodman was confident shareholders would side with his nominees.
“I knew Meir wasn’t going to be successful from the beginning,” Goodman said. “This has been a big waste of time and money and effort and I’m looking forward to focusing back on building a great business.”
The face of Medison’s public campaign against Knight, Jakobsohn said in a statement that he withdrew his own nomination because he believes he can be more effective outside the role. He said his campaign “rocked the boat” at the company.
“Our campaign created unanimous consent that an immediate change is required at Knight and also a collective demand from shareholders that Knight’s leadership create near term value and increase the share price,” Jakobsohn said.
Medison later disputed that Jakobsohn did not have enough votes to be re-elected.
“The choice was to have (Jakobsohn) sit in a conflicted board room or be able to do more as an active shareholder,” spokesperson Dan Gagnier said.
In February, Jakobsohn brought a feud that had been escalating behind closed doors to the public by writing a letter in which he accused Goodman of conflicts of interest, ripped the CEO’s low-risk business strategy and called for his resignation.
This has been a big waste of time and money and effort
Goodman, Jakobsohn said, owned a larger stake in Pharmascience Inc., a direct competitor run by his brother, than he did in Knight and would therefore have more to gain from Pharmascience’s success. To dissuade shareholder concerns, Goodman would later place his shares of Pharmascience in a blind trust.
Compounding Jakobsohn’s concerns about Goodman were his complaints that the Knight CEO’s conservative strategy, which focused on providing loans and investing in venture capital, had not led shareholders being rewarded for their investments. According to a Medison analysis, the market was essentially only valuing Knight’s stock, which closed Tuesday at $7.35, for its cash positions and holdings, attributing only $0.25 per share for the actual pharmaceutical business.
Jakobsohn proposed wide changes after launching a proxy fight in March, promising to deploy the company’s cash flow with share buybacks and aggressively pursuing contracts for innovative therapies that have massive earnings potential. At the annual general meeting, shareholders also rejected adopting Jakobsohn’s business strategy for the company going forward.
Before the vote, advisory firms Institutional Shareholder Services and Glass Lewis recommended that shareholders withhold votes for Jakobsohn, citing his poor attendance record and what they described as his questionable motivations for starting the campaign.
I don’t want to work with him anymore
When asked what the future would hold without Jakobsohn on the board, Goodman interjected and asked a reporter to “say that again” because “it has a good ring to it” before offering a blunt conclusion.
“I don’t want to work with him anymore,” Goodman said.
The two had been attempting to negotiate a separation before Jakobsohn launched a proxy fight, Goodman said, and he’d still be willing to meet with Jakobsohn at the negotiating table to come to a peaceful parting. “But i’m not ready to part ways at any cost,” Goodman warned.
In response, Gagnier said Medison was focused on continuing to be an active shareholder.
The conflict hasn’t led Goodman to sour on the idea of pursuing partnerships with companies like Medison going forward. He said his investment in the company is still a good one, but that he would spend more time getting to know the leadership of a future partner before agreeing to make a deal.
“I spent too much time doing diligence on the company, not enough time doing diligence on Meir,” Goodman said.