CASTLE ROCK, Colo.,
Sept. 20, 2016 /PRNewswire/
-- Venaxis®, Inc. (Nasdaq: APPY), announced today that
following its acquisition of BiOptix Diagnostics, Inc., ("BiOptix")
that was announced on September 13,
2016, Venaxis has issued the following letter to its
shareholders. The letter is posted on the company's website.
Castle Rock, CO
Dear Venaxis Shareholders:
On behalf of the Venaxis Board of Directors, I would like to
take this opportunity to provide further information regarding our
decision to acquire a controlling interest in BiOptix Diagnostics,
Inc., including how Venaxis intends to execute on the BiOptix
opportunity and return long-term value to all of our
shareholders. I will also take this opportunity to respond to
the recent Schedule 13D filings made with the SEC by Mr.
Barry Honig.
On investor calls over the past twelve to eighteen months, I
have described the process employed by the Venaxis Board and
management to evaluate potential merger and/or acquisition
opportunities. Our focus has been primarily on companies in
the life science space with commercial stage products and services
in which we could leverage our assets to maximize long-term value
for the Venaxis shareholders. We have further focused on
opportunities where the Venaxis capital and public company listing
status would also potentially lead to significant value
inflection. Our goal during this process was to evaluate as
many high quality opportunities meeting our criteria, as possible
while conserving cash. During this process we
extensively interviewed dozens of companies, negotiated with a
number of promising targets, and conducted diligence on several
companies, including BiOptix.
The decision to ultimately acquire BiOptix represented our
assessment, after diligence was completed, that the acquisition of
BiOptix, including its commercial stage products, represented, in
the view of the Board and management, the best opportunity
available to Venaxis to create value for our shareholders.
Let me explain why. First, the market for label-free
instrumentation for drug discovery is large and growing, with
multiple potential customers, including pharmaceutical companies,
life science companies, academic research institutions and contract
research organizations. While we certainly recognize
that there are large competitors in this estimated $1 billion market, we believe there is room for
BiOptix, which has developed a product with significant performance
and cost advantages. As a smaller company in the space,
BiOptix has a significant opportunity to differentiate itself
through its science and technical support. Second, our
interviews with BiOptix customers and pipeline prospects, conducted
as part of our diligence process, reflected their delight with the
BiOptix product, team and approach to the market.
Third, our technical diligence on the BiOptix 404pi product
reflected a highly credible team which has developed a solid
product platform using technology which is scalable to future high
value products. Finally, the main things BiOptix was missing
were the resources needed to fully launch their product and to
provide services in the field required to sell and service the
404pi product, and management with proven commercial
experience. It was our assessment of the BiOptix
commercial plan that a relatively modest investment in
commercialization of the 404pi product could create significant
momentum for this commercial stage company.
Another major factor the Venaxis Board considered in choosing
the BiOptix acquisition was the significant value received for the
consideration paid, which was approximately 14% of current Venaxis
outstanding stock. No cash was needed to be used in the execution
of this transaction. We believe this provides tremendous
value, particularly considering that over $20 million was previously invested to develop
the 404pi instrument and bring the product to market.
With no regulatory barriers, such as FDA approval requirements,
needed to market the 404pi, our funds will be deployed to grow
sales, improve the product and develop next generation
systems. We believe the investment in commercialization will
result in a potentially significant return to our shareholders.
Let me now address the accusations made by Mr. Honig in his
recent Schedule 13D filings:
- Mr. Honig asserts that the BiOptix transaction was an "inside
job" which we executed quickly and with limited
diligence.
As mentioned earlier, Venaxis evaluated many companies before
choosing BiOptix. Our first significant meeting with BiOptix
was in April 2016 and we carefully
conducted diligence on BiOptix (and other companies) after
that. While Mr. Jeffrey
Peierls, who is a long-term investor in Venaxis with minimal
holdings and a larger investor in BiOptix, made the initial
introduction, Venaxis evaluated the business and made the decision
to acquire BiOptix separate of any influence by Mr. Peierls. As
stated in the attached letter, Mr. Peierls fervently objects to the
unfounded accusations of Mr. Honig.
- Mr. Honig asserts that the decision to acquire BiOptix was made
to entrench the Venaxis management team and Board.
While many of the opportunities we evaluated did involve potential
transactions where the Venaxis management and Board would not have
been in control after the transaction, we did not select the
BiOptix transaction to entrench the Venaxis Board and management
team. Instead, we believe it is an advantage to the combined
company that the skills and experience of our management team and
Board provide additional assets to the combined company. We
were willing to, and did, consider potential transactions where
such control would not have been present, the Strand transaction
(which was announced but ultimately terminated) is an
example. During our evaluation process, Mr. Honig brought to
my attention several companies which fell into this category,
including some where he owned a stake or had a relationship with
the potential target. As Mr. Honig is well aware, we were
open to looking at companies he brought forward and we met with the
management teams and conducted preliminary diligence on two of
these companies during the process. After our process, we
determined that the BiOptix transaction, which can use the skills
of the current management team and Board of Venaxis to complement
and enhance the BiOptix team, coupled with the value acquired for
the consideration paid, and the ability to deploy our capital and
public company experience in a large potential market for a
commercial-ready product created potential long-term value for all
of our shareholders. As I mentioned in the investor call on
September 14, 2016, our Nominating
and Corporate Governance Committee of the Board is evaluating the
skills, qualifications and experience of one or more of the legacy
BiOptix directors, and we may add to our Board to further enhance
the experience and background of our Board members in the relevant
industries.
- Mr. Honig asserts that I withheld "negative information" about
BiOptix from the Venaxis Board.
This is not an accurate statement. My obligation as CEO is to
keep our Board informed of all relevant information and I have
consistently done so as the CEO of Venaxis. Mr. Honig has no
grounds to impugn my personal integrity and our management team has
consistently provided, and our Board has consistently been vigilant
in gathering, all relevant facts before making decisions in the
exercise of their fiduciary duties for the good of all Venaxis
shareholders.
I find it unfortunate that Mr. Honig has decided to take an
adversarial course of action against Venaxis. Since he became
a significant shareholder in the spring of 2016, I have met with
and spoken with him on many occasions and have been open to his
thoughts and ideas. When he determined that he wanted to
propose a new slate of directors recently, I told him that any
shareholder could, of course, follow the Board-approved process to
propose Board candidates. The Venaxis Nominating and
Corporate Governance Committee is evaluating the candidates he has
proposed. Again, the Board is committed to serving as
fiduciaries for all of the shareholders of Venaxis.
In closing, we are excited about moving forward and building
value for the Venaxis shareholders through developing and growing
the exciting BiOptix opportunity. I sincerely request
your support as we move forward.
Very best regards……
Stephen Lundy
Stephen Lundy
President and Chief Executive Officer
Attached letter from E. Jeffrey
Peierls, a Venaxis shareholder
E. Jeffrey
Peierls
Golden, CO 80401
September 15, 2016
Stephen T. Lundy
Chief Executive Officer
Venaxis, Inc.
1585 South Perry Street
Castle Rock, CO 80104
Re: Barry
Honig's scurrilous letter of September 14th
Dear Stephen:
A friend spotted Mr. Honig's Schedule 13D/A filing this
afternoon. I was shocked to see what I consider defamatory
allegations that he made against you and the rest of management.
And I strongly resent the implication by him that I somehow
colluded with you to protect your jobs. I'm sure that you are
aware that Honig's call for a special meeting was never mentioned
to me. During our negotiations over the BiOptix acquisition, I did
hear that Honig was acquiring a significant ownership in Venaxis
stock, and that he was urging Venaxis to enter into transactions
that the Board determined were not in the best interest of the
company's shareholders. I did not realize, however, that he
was a person who would launch a personal attack against you when
you turned down his proposals.
Mr. Honig has implied that my ownership in Venaxis stock created
the perception that the BiOptix acquisition was not done on an
arms' length basis. To the contrary, my beneficial ownership,
including a modest number of out-of-the-money warrants was in the
range of 3% to 4% of Venaxis' outstanding shares before the
acquisition. That was apparently far less than his ownership when
he was pushing his proposals.
If Venaxis shareholders contact you, you might wish to mention
my strong preference to receive Venaxis shares for my ownership in
BiOptix during our negotiations, rather than being cashed out. I
strongly disagree with Mr. Honig's allegations regarding the value
of BiOptix' business. I feel that the combination of BiOptix'
technology and Venaxis' resources has the potential to make the
shares of Venaxis that I received considerably more valuable over a
reasonable period of time.
Please accept my sympathy for being attacked so unfairly. And my
best wishes as you build a successful business.
Best regards,
Jeff Peierls
* * *
* *
About the Company--
Venaxis, Inc., through its operating subsidiary BiOptix
Diagnostics, Inc., has developed an Enhanced Surface Plasmon
Resonance ("SPR") instrument designed to increase the flexibility
and reliability of SPR, in order to address the increasing demand
for instruments suitable for a broader range of applications, while
offering far greater performance per dollar than other instruments
commercially available. BiOptix SPR biosensors shed light on
important binding parameters that are crucial for determining
whether a biologic or small molecule drug will be efficacious in
humans and at what dose a drug should be administered.
Forward-Looking Statements
This press release
includes "forward-looking statements" of Venaxis, Inc. (the
"Company") as defined by the Securities and Exchange Commission
("SEC"). All statements, other than statements of historical fact,
included in this press release that address activities, events or
developments that the Company believes or anticipates will or may
occur in the future are forward-looking statements. These
statements are based on certain assumptions made based on
experience, expected future developments and other factors the
Company believes are appropriate in the circumstances. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the Company.
Investors are cautioned that any such statements are not guarantees
of future performance. Actual results or developments may differ
materially from those projected in the forward-looking statements,
as a result of many factors, including our ability to advance
BiOptix commercialization and product development activities,
retain the management and scientific team to advance the products,
compete effectively in a competitive market, obtain and enforce
intellectual property rights, realize value of intangible assets,
and deal with general business conditions. Furthermore, the Company
does not intend (and is not obligated) to update publicly any
forward-looking statements.
Contact: InvestorRelations@venaxis.com
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SOURCE Venaxis, Inc.