SHAREHOLDERS COMMITTEE COMMENCES CONSENT CAMPAIGN TO OUST BOARD OF DDI PHARMACEUTICALS, INC.
PORTLAND, Ore., April 16 /PRNewswire/ -- The DDI Shareholders Committee for Change announced today that it has commenced a solicitation of consents to remove the current board of directors of DDI Pharmaceuticals, Inc. (NASDAQ: DDIX), and elect the Shareholders Committee's nominees as the new board. The Shareholders Committee is soliciting consents because the DDI Board, headed by Henry Lerman, has said it will refuse to recognize the Shareholders Committee's nominees at the annual meeting scheduled for May 21. Mr. Ray R. Rogers, chairman of the Shareholders Committee, stated, "We had hoped to nominate our slate of candidates and present our case to DDI Shareholders at the Annual Meeting, but apparently Mr. Lerman is only interested in running unopposed. Rogers stated, "We find it peculiar that Mr. Lerman has attacked us publicly as a takeover group, we are shareholders. As shareholders, we want positive change and growth, not a continuing record of failure. As Mr. Lerman's current position at DDI resulted from a proxy fight, he should know that when shareholders elect a new board, it is not a takeover." Rogers stated, "In 12 years of Mr. Lerman, DDI shareholders haven't received a dividend, the stock price has gone from $18 to $4 and the company's strategic position has deteriorated while Lerman and other directors have rewarded themselves with golden parachute salary continuation plans and warrants to purchase 850,000 DDI shares at $2-7/8 per share. Contrary to what Mr. Lerman wants shareholders to believe, the Shareholders Committee is not seeking to acquire DDI or merge it with another company, neither of which could be accomplished without shareholder approval. We only want to bring new leadership to a troubled company," Rogers said. "We are asking DDI shareholders to remove a board which we believe has failed to advance the interests of shareholders, and replace it with a slate with over 100 years hand-on experience in the pharmaceutical and biotechnology industries. Our nominees include individuals with proven track records of obtaining FDA approval to market and sell products in the U.S. That is something Henry Lerman has never done," Rogers added. A copy of the Shareholders Committee's letter to DDI shareholders follows. VOTE TODAY TO CHANGE THE LEADERSHIP AT DDI April 15, 1993 Dear Fellow Shareholder: We believe it is time for DDI shareholders to regain control of their company. We ask you to help us by voting your shares to remove Henry Lerman, the chairman and president of DDI Pharmaceuticals, and his board of directors and to replace them with a new board that will be dedicated to accelerating your company's technical growth and its position in the marketplace. Mr. Lerman has controlled the development of DDI for the past 12 years. Consider the effects: -- As of the March 30 record date of our campaign to change leadership, DDI stock had lost more than 78 percent of the market value it held when Mr. Lerman ousted his predecessor in 1980. -- In March 1992, the company announced the failure of its Phase 3 clinical trials at the U.S. Food and Drug Administration ("FDA"). -- DDI's 1991 10-K report disclosed that key patents had expired, royalty payments had diminished, and revenue streams from foreign licensing partners (which made up 80 percent of 1991 total revenues) are set to expire in this decade. -- DDI's 1992 annual report to shareholders reports 1991 and 1992 combined losses of $532,000 and projects further losses for 1993. AN OPPORTUNITY FOR POSITIVE CHANGE The DDI Shareholders Committee for Change needs your consent ballot to help us bring new leadership to DDI. Apparently relying upon lengthy advance notice bylaw provisions (under which our alternative slate of directors was arguably nominated too late), Mr. Lerman and his board have not agreed to recognize our candidates at the 1993 Annual Meeting. This is not the democratic process which public company shareholders should enjoy and it seems to us that Mr. Lerman does not want you to have a choice in determining who will be responsible for the future of your DDI investment. We are therefore offering you the opportunity to change DDI leadership through the consent process, without reference to differing interpretations of DDI's advance notice provisions. The Committee's members are shareholders and have each founded and operated successful businesses. Members of the Committee and its nominees own 156,400 DDI shares, or 3.2 percent of the total amount outstanding. We share with you a common interest in seeing our investment in DDI prosper and need your support to bring to DDI the leadership that the company and its shareholders deserve. The Committee is chaired by Mr. Ray R. Rogers, the Chairman of a medical manufacturing concern. Mr. Rogers has financial and operating experience in the biotechnology field and has led his organization to successful FDA approvals. The Committee's nominees include all members of the Committee, and: -- Dr. Anna D. Barker, an immunologist and executive with over twenty years of senior international management experience in biotechnology and drug development support. -- Mr. Lawrence A. Brown Jr., a specialist in growth for health care business with over 30-years of experience in the pharmaceutical industry and corporate structuring for commercial medical organizations. -- Dr. Gerald D. Mayer, a clinical microbiologist with over twenty- five years of management experience in infectious disease research, drug development and clinical testing. -- Mr. Peter E. Taussig, an attorney and advisor specializing in turnarounds of troubled companies, with over 25-years of experience in finance and corporate law. The combined industry experience of the committee's slate seems to contrast sharply with that of the present DDI Board. In DDI's public disclosures, Mr. Lerman and the current directors have made no mention of medical or pharmaceutical industry experience apart from their work at DDI. The Committee believes that its nominees to the board can bring much-needed experience and expertise to the company. Because the nomination process at the Annual Meeting has been closed to us, we are now offering shareholders a choice through the consent procedure. You can vote to bring new leadership to DDI by signing, dating and mailing the enclosed WHITE consent card today. MR. LERMAN'S TWELVE YEAR RECORD: UNKEPT PROMISES A dissident group led by Mr. Lerman gained control of DDI in 1980 following the initiation of a proxy contest (the same process Mr. Lerman and his board apparently wish to withhold from you). During its 1980 campaign, the Lerman-led dissident group sought the support of DDI shareholders by offering a so-called "program to revitalize DDI." Take a close look at what Mr. Lerman has failed to do. You be the judge as to whether DDI has been "revitalized." Lerman's 1980 Promise The Twelve-Year Record "We will resume clinical testing for DDI has failed to gain FDA Orgotein (superoxide dismutase (SOD) approval to market and in the United States in order to hasten sell any drug product for (FDA) approval..." human use in the U.S. "We will work to increase revenues from Sales of Palosein through Palosein (SOD for veterinary use), DDI's sole U.S. either by additional sales efforts distributor of veterinary or licensing agreements." drugs were discontinued in 1990. "We will review DDI's research DDI has failed to develop and development program." and conduct adequate clinical trials to meet the FDA's requirements for approval of its original drug product. DDI has not developed a new drug product during Mr. Lerman's tenure. Major competitors now hold SOD manufacturing and use patents which could have been valuable to DDI. Rather than seeing its own technology to market, DDI has become a supplier of raw materials to the laboratories of other research groups. "We will select a new chief In May 1982, Mr. Lerman executive officer, with abandoned the search for demonstrated pharmaceutical an experienced chief experience." executive and installed himself as president and chief executive officer. This is not the leadership that DDI's shareholders were promised in 1980. In our opinion, Mr. Lerman has failed to develop DDI's technology at a pace sufficient to keep it in step with current scientific advances. By pursuing a low growth strategy, Mr. Lerman has failed to meet his pledges to the shareholders and has neglected company interests. THE LERMAN BOARD HAS NOT NEGLECTED ITS OWN INTERESTS Despite a twelve-year record of unkept promises and lost value for shareholders, members of the Lerman Board (excluding Mr. Norsell altogether and Dr. Claassen prior to January 1989) have not neglected their own interests. Consider the following: -- In 1980, proxy materials from the Lerman dissident group stated the intention to submit to the shareholders for approval, all plans dealing with director compensation and involving DDI common stock. -- In 1982, DDI shareholders approved a stock option plan which allocated to directors a maximum of 120,000 shares (2.5 percent of shares then outstanding) for incentive purposes. This plan was abandoned in 1988. -- In 1986, DDI provided "golden parachute" salary continuation plans for Mr. Lerman and others. -- From 1987 to 1989, the Lerman Board issued warrants to directors and one other officer, allowing the purchase of 850,00 shares, or approximately 17.1 percent of then shares then outstanding, all without shareholder approval. These warrants are transferable to third parties. -- When the market price of DDI shares fell in 1987, the Lerman Board reduced the purchase price for the warrant shares from $4 to $2.875 per share. -- Effective for the period 1990-95, the Lerman Board adopted a plan allowing it to distribute, in its sole discretion, bonuses to present, former, deceased and/or disabled officers and key employees. Although the plan has not been funded, according to the plan formula, as much as $1,850,000 could be distributed from the company's eligible license revenues received during the plan term. We think it is time to elect directors who will put the interests of the shareholders first. OUR PROGRAM FOR CHANGE The DDI Shareholders Committee for Change has assembled a slate of board nominees who can bring leadership to DDI. The Committee's slate contains individuals with particular expertise in biotechnology -- including pharmaceutical development, marketing and regulatory affairs -- and is augmented by individuals with strength in finance and operations management. The Committee and its nominees are committed to developing a strategic plan for the betterment of the company. If elected, the Committee's nominees plan to employ the pharmaceutical and biotechnology expertise of its members to: -- Recruit qualified senior operating and technical personnel to the company. -- Produce a realistic program for addressing regulatory affairs, with particular emphasis on strategies for obtaining FDA approval of products for sale in the U.S. -- Develop opportunities for new industry partnerships and seek to enhance DDI's existing manufacturing and marketing relationships. -- Establish a scientific advisory board and expand DDI's communications and interaction with the broader scientific community. -- Prepare and make available to shareholders a report concerning DDI's past performance and opportunities for the future; and establish an effective investor relations program to keep shareholders informed. We need your support to bring about much needed change in the leadership of DDI. By signing, dating and mailing the enclosed WHITE consent card, you will be voting to bring new leadership to DDI by removing Mr. Lerman and the rest of the board as directors and by electing the Committee's nominees to replace them. Thank you for your consideration and support. Sincerely DDI Shareholders Committee for Change (Signed) Ray R. Rogers Chairman -0- 4/16/93 /CONTACT: Ray Rogers, chairman of DDI Shareholders Committee for Change, 503-283-3911, or John Cornwell of D.F. King & Co., Inc., 212-269-5550, for DDI Shareholders Committee for Change/ (DDIX)
CO: DDI Shareholders Committee for Change; DDI Pharmaceuticals, Inc. ST: Oregon IN: MTC SU:
LD-TS -- NY080 -- 7006 04/16/93 18:30 EDT
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|Date:||Apr 16, 1993|
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