IRVINE, Calif.--(BUSINESS WIRE)--
BIOLASE, Inc. (NASDAQ:BIOL), the world’s leading dental laser
manufacturer and distributor, today sent a letter to its stockholders.
The full text of the letter from the majority of the Board to
stockholders is below:
To Our Fellow Stockholders:
BIOLASE, Inc.’s annual meeting of stockholders will be held on August
27, 2014, and, as a stockholder, you have a critical decision to make
about the future of your investment. We urge
you to support the Board’s five recommended director candidates on the
White Proxy Card.
Your Company Desperately Needed A Leadership
On June 17, 2014, BIOLASE announced significant leadership changes. The
new leadership inherited a company that had reported a net loss of $4.9
million for the first quarter of 2014. These results followed four
consecutive quarters of poor performance under the leadership of the
Company’s former Chairman & CEO, and current non-executive Board member,
Federico Pignatelli. For the full year in 2013, BIOLASE incurred a net
loss of $11.5 million, and since the beginning of 2013, the Company has
suffered from declining product and services revenue in all but one
quarter, as well as significant quarterly losses and insufficient cash.
Overall, in the 14 quarters since Mr. Pignatelli became CEO of the
Company, BIOLASE registered a cumulative net loss of $23.7 million.
When the June 2014 leadership changes occurred, the Company faced a
significant debt repayment of $3.5 million due on August 1, 2014, and
many suppliers were refusing to ship except by cash on delivery (COD).
In a May 14, 2014 press release issued following BIOLASE’s announcement
of first quarter results, the Company’s largest stockholder stated:
“We are disappointed to see Biolase post yet again dismal quarterly
financial and operating results.Biolase’s Chairman and CEO,
Federico Pignatelli, makes a bevy of excuses to avoid taking
responsibility for the Company’s results…”
– Oracle Partners, L.P.
Mr. Pignatelli ultimately resigned as Chairman and CEO following a June
12, 2014Delaware Supreme Court ruling, the effect of which was that a
majority of the Company’s Board had indicated a desire to remove Mr.
Pignatelli as CEO. The Delaware Supreme Court noted:
“The Court of Chancery [found] that the Biolase board of directors
currently consists of five directors, including Paul Clark.The
Court of Chancery concluded that Clark was appointed to the Biolase
board after a previous director, Alexander Arrow, resigned through oral
statements at a board meeting on February 28, 2014.Federico
Pignatelli, Biolase’s Chief Executive Officer and Chairman, planned
Arrow’s resignation and Clark’s appointment to the board, and a press
release issued by Biolase after the board meeting quoted Pignatelli as
saying he was “thrilled” with Clark’s appointment to the board.But
Pignatelli quickly reversed course when he learned that Clark had
aligned himself with a faction of the board that wanted to remove
Pignatelli from his position as CEO.”
– Delaware Supreme Court
New Leadership Is Taking The Right Steps
Improve Financial And Operational Performance
On the day of the announcement of Mr. Pignatelli’s resignation as
Chairman and CEO and other leadership changes, the Company’s stock price
closed nearly 20% higher than the previous day’s closing price. On June
17, 2014, the Board elected Mr. Paul Clark as Chairman of the Board. Mr.
Clark has served as Chairman, CEO and President of ICOS Corporation,
which researched and marketed Cialis and was acquired by Eli Lilly and
Company in 2007 for approximately $2.3 billion. Prior to serving at ICOS
Corporation, he was President of Abbott Laboratories’ Pharmaceuticals
Division and served on Abbott’s board of directors. During his tenure as
President of Abbott’s Pharmaceutical Division, that division’s sales
grew from $250 million to $2.6 billion.
On June 17, 2014, the Board also elected Mr. Jeffrey Nugent as a
director and appointed him as Acting CEO. Mr. Nugent has served as
Worldwide President and CEO of Neutrogena Corporation following a 20
year career of senior leadership roles at Johnson & Johnson, at both the
operating company and corporate levels. He was responsible for Johnson &
Johnson’s Dental Care business, among others, and he also served as
Worldwide Head of Quality Management, a role in which he reported to the
Chairman. Mr. Nugent also has served as President and CEO of Revlon,
Inc. and Founder, President and CEO of Precision Dermatology, Inc.,
which was recently acquired by Valeant Pharmaceuticals International,
Inc. A search for a new, permanent CEO is underway.
As one analyst noted following the leadership changes:
“Change in leadership brings stability and focus to BIOL, in our
view…. Based on a phone conversation with Mr. Nugent yesterday, we think
his extensive public company background and knowledge of the medical
device industry will provide BIOL with the leadership and stability that
had been lacking in recent months.”
– Sidoti & Company, LLC
With the new leadership of Messrs. Clark and Nugent in place for only
five weeks, the Company has already raised $12 million by selling
Company common stock at an undiscounted market price, and it has retired
the full amount of the remaining balance under its Comerica Bank lines
of credit. The Company’s suppliers have returned to shipping on more
normal terms. And the Company has made significant strides in improving
its business and budget planning and in reenergizing and incentivising
its sales force.
You Have An Important Decision To MakeFrederic H. Moll, M.D. has served as Chairman of Auris Surgical
Robotics, Inc., an ophthalmic robotics company, since June 2011 and
has served as its Chief Executive Officer since August 2012. Dr. Moll
co-founded Hansen Medical, Inc., a publicly-held medical robotics
company, in September 2002, served as its Chief Executive Officer
through June 2010, and served on its board of directors through May
2012. In 1995, Dr. Moll co-founded Intuitive Surgical, Inc., a
manufacturer of robotic surgical systems that became publicly-held in
James R. Talevich serves as a director of Nova LifeStyle, Inc.,
a publicly-held international manufacturing company. Mr. Talevich was
Chief Financial Officer of I-Flow Corporation, a publicly-held medical
technology company, from 2000 to 2009. Prior to I-Flow, he served as
Chief Financial Officer of Gish Biomedical, Inc., a publicly- held
medical device company, from 1999 to 2000, and as Chief Financial
Officer of Tectrix Fitness Equipment, Inc., a privately-held
manufacturer of virtual reality fitness equipment, from 1995 to 1999.
Jonathan T. Lord, M.D. serves as a professor of pathology at
the University of Miami’s Miller School of Medicine. From March 2012
to January 2013, Dr. Lord was the Chief Operating Officer of the
Miller School and Uhealth-University of Miami Health System. From
August 2011 to March 2012, Dr. Lord served as the Chief Innovation
Officer at the University of Miami, Florida. From April 2009 to
January 2010, Dr. Lord served as President and Chief Executive Officer
of Navigenics, Inc., a privately held healthcare company. Since 2008,
Dr. Lord has served on the board of directors of DexCom, Inc., a
medical device company focused on the design, development and
commercialization of continuous glucose monitoring systems, and he has
served as its Chairman since May 2010. Dr. Lord previously served as a
director of Stericycle, Inc., a publicly traded company, and MAKO
Surgical Corp., a publicly traded company that was subsequently sold.
Dr. Lord also serves or has served as a director of a number of
The Company’s bylaws provide that, beginning with the election of
directors at the Company’s 2014 annual meeting of stockholders, our
Board will be comprised of no more than five directors. Our Board has
nominated four candidates for election to our Board at the annual
meeting: Mr. Clark, Mr. Nugent, Frederic H. Moll, M.D., and James R.
Talevich (the “Board Nominees”).
In addition, Oracle Partners, L.P., which together with its affiliates
beneficially owns 19.2% of our common stock, has provided notice of its
intention to nominate Jonathan T. Lord, M.D. for election to our Board
at the annual meeting.
Our Board believes that it is important to ensure that BIOLASE’s Board
is comprised of highly qualified individuals who have relevant
experience and are accomplished in their respective fields. Our Board
also believes that it is important for the full Board to work together
constructively with a focus on shareholder value and a duty both to the
Company and to the interests of all of the Company’s stockholders. Our
Board believes that the four Board Nominees and Dr. Lord (Oracle’s
nominee) meet these criteria.
For these reasons, WE RECOMMEND THAT YOU VOTE FOR
ALL FIVE BOARD RECOMMENDED DIRECTOR CANDIDATES. In addition to
Messrs. Clark and Nugent, we also urge you to support Fred Moll, Jim
Talevich and Jonathan Lord (more information about them is available
in the proxy statement):
Although our Board does not recommend that
stockholders vote for the election of Federico Pignatelli to our Board,
Mr. Pignatelli is listed on the WHITE proxy card because our Board
resolved that, consistent with the Agreement, dated as of June 6, 2013,
among Federico Pignatelli, the Company and each of Alexander K. Arrow,
Norman J. Nemoy and Gregory E. Lichtwardt, Mr. Pignatelli would be
nominated for election to our Board at the annual meeting.
If you desire to vote in accordance with our
Board’s recommendation, you should vote FOR the Board’s five recommended
director candidates and leave the boxes next to Mr. Pignatelli’s name
With Your Support, BIOLASE Has A Great Future
We believe that under the right leadership team, there is great value in
BIOLASE and potential to achieve long-term success and deliver
shareholder value. The Company today has fresh capital, no debt
outstanding on its revolving credit facilities (as of July 30, 2014),
market leading products, an extensive intellectual property portfolio
with wide applications in a variety of markets, and a significant level
of support among our employees and customers. And the potential of laser
dentistry is truly global in scope and still largely untapped. It is our
aim to be the company that captures it and continues to build on its
The new BIOLASE leadership team has created a new vision for the
Company, one built around a focus on our customers, employees and
stockholders, strong growth and a return to sustainable profitability.
We are also taking steps to increase the pace of innovation that has
been a hallmark of the BIOLASE corporate culture.
The problems that have hindered BIOLASE in the past have never been
about its employees or customer base, both of which we believe have
maintained a steadfast belief in the Company despite its recent
challenges. We believe the problems have been a failure of leadership
focus and execution. As explained above, we have begun to take the
necessary steps to change that.
We sincerely believe we are putting the necessary pieces in place for a
dramatic turnaround at BIOLASE. We want to thank you for the loyalty to
BIOLASE you have shown through the difficult times and ask that you join
us as we build a new future for this Company.
PLEASE READ THE PROXY STATEMENT AND VOTE FOR
BOARD RECOMMENDED DIRECTOR CANDIDATES
/s/ Paul N. Clark
/s/ Jeffrey M. Nugent
/s/ Frederick H. Moll, M.D.
/s/ James R. Talevich
|Paul N. Clark||Jeffrey M. Nugent||Frederick H. Moll, M.D.
||James R. Talevich|
Director and Acting CEO
About BIOLASE, Inc.
BIOLASE, Inc. is a biomedical company that develops, manufactures, and
markets innovative lasers in dentistry and medicine and also markets and
distributes high-end 2D and 3D digital imaging
equipment, CAD/CAM intraoral scanners, and in-office milling
machines and 3D printers; products that are focused on technologies that
advance the practice of dentistry and medicine.
The Company’s proprietary laser products incorporate approximately 300
patented and patent-pending technologies designed to provide
biologically clinically superior performance with less pain and faster
recovery times. Its innovative products provide cutting-edge technology
at competitive prices to deliver the best results for dentists and
patients. BIOLASE’s principal products
are revolutionary dental laser systems that perform a broad range of
dental procedures, including cosmetic and complex surgical applications,
and a full line of dental imaging equipment. BIOLASE has sold more than
25,000 laser systems. Other laser products under development address
ophthalmology and other medical and consumer markets.
For updates and information on WaterLase and laser dentistry, find
BIOLASE online at www.biolase.com,
Facebook at www.facebook.com/biolase,
Twitter at www.twitter.com/biolaseinc,
Pinterest at www.pinterest.com/biolase,
LinkedIn at www.linkedin.com/company/biolase,
Google+ at www.google.com/+BIOLASEIrvine,
Instagram at www.instagram.com/biolaseinc,
and YouTube at www.youtube.com/biolasevideos.
BIOLASE® and WaterLase® are registered trademarks
of BIOLASE, Inc.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the safe harbor provided by the Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be identified
through the use of words such as “anticipates,” “expects,” “intends,”
“plans,” “believes,” “aims,” “estimates,” “may,” “will,” and variations
of these words or similar expressions. Readers are cautioned not to
place undue reliance on these forward-looking statements, which are
based on BIOLASE’s current expectations, speak only as of the date of
this release and are subject to risks, uncertainties and other factors
that may cause BIOLASE’s actual results to differ materially from the
statements contained in this press release, including those other risks,
uncertainties and other factors described in Item 1A of BIOLASE’s annual
report on Form 10-K for the fiscal year ended December 31, 2013, filed
with the Securities and Exchange Commission. Except as required by law,
BIOLASE undertakes no obligation to update, amend or clarify any
forward-looking statements to reflect events, new information or
circumstances occurring after the issuance of this release.
Important Additional Information
BIOLASE, Inc. (“BIOLASE”), its directors and its executive officers are
deemed to be participants in the solicitation of proxies from BIOLASE
stockholders in connection with BIOLASE’s 2014 annual meeting of
stockholders. BIOLASE has filed a definitive proxy statement with the
U.S. Securities and Exchange Commission (the “SEC”) in connection with
such solicitation of proxies from BIOLASE stockholders. BIOLASE
STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY
STATEMENT AND ACCOMPANYING PROXY CARD AS THEY CONTAIN IMPORTANT
INFORMATION. Information regarding the identity of participants, and
their direct or indirect interests, by security holdings or otherwise,
is set forth in the definitive proxy statement filed with the SEC.
Stockholders are able to obtain the definitive proxy statement, any
amendments or supplements to the proxy statement and other documents
filed by BIOLASE with the SEC for no charge at the SEC’s website at www.sec.gov.
Copies will also be available at no charge at BIOLASE’s website at www.biolase.com
or by writing to BIOLASE at 4 Cromwell, Irvine, California 92618,
Sard Verbinnen & Co
Patrick Scanlan, 212-687-8080
Dan Burch, 212-929-5500
Source: BIOLASE, Inc.