LOS ANGELES, Aug. 5, 2014 (GLOBE NEWSWIRE) -- Federico Pignatelli, former CEO and current Director and stockholder of BIOLASE, Inc. (Nasdaq:BIOL), addresses various incorrect, incomplete and misleading statements as well as mischaracterizations contained in a Letter to Stockholders and related news release issued by BIOLASE on July 30, 2014, and signed by four BIOLASE Directors. In particular, the financial and operating results of BIOLASE during the time Mr. Pignatelli was in executive leadership positions were misrepresented through a biased and incomplete interpretation of actual accomplishments.
BIOLASE prospered substantially under Mr. Pignatelli. His involvement with the Company in an executive capacity dates back to 1994, when BIOLASE had only 12 employees, $1 million in annual revenues and a market capitalization of $3.5 million. Under his stewardship as Executive Chairman, 10 years later BIOLASE was profitable and boasted 200 employees, $50 million in annual revenues and a market capitalization of $500 million.
Mr. Pignatelli left active management of BIOLASE in early 2006, and by August 2010 the Company's market capitalization had plummeted to $15 million; it had posted tens of millions of dollars in losses, was essentially insolvent and was selling only two products, both of which were woefully outdated. During 2010 and 2011 Mr. Pignatelli proceeded to regain control of the Board and received 98% of the votes cast at the 2010 annual meeting, compared with less than 50% of the votes cast for all other Directors. At the time revenues were running at $20 million annualized, yet by early 2014 the market capitalization had increased to nearly $130 million (having exceeded $200 million twice during the period), annual revenues had tripled to nearly $60 million and the Company was on track for a strong 2014 and 2015 bolstered by several newly launched and soon-to-be launched products.
Mr. Pignatelli oversaw the repayment of all Company debt (approximately $18 million, consisting of $6 million in bank debt, $9 million owed to Henry Schein and $3 million owed to vendors), raised more than $18 million in equity capital including registered direct and private placement offerings at $5.55 and $5.60 per share, invested approximately $15 million in research and development and launched more than 10 new products while reporting a non-GAAP operating loss of a relatively modest $9.2 million in the aggregate for the years 2011 through 2013 (excluding interest and non-cash expenses, and a charge for obsolete inventory, a heritage from previous management), among multiple other achievements in pursuit of the objective of sustained growth. Mr. Pignatelli also championed a significant overseas expansion that resulted in an increase in the number of international distributors from 7 to 72 over a three-year period.
Under Mr. Pignatelli's leadership, BIOLASE expanded its product line from one outdated WaterLase system to three advanced WaterLase systems and several cutting-edge diode laser systems alongside a full complement of other innovative dental technologies such as ConeBeam digital radiography and the top-of-the-line 3Shape Trio CAD/CAM digital impressions. BIOLASE developed a proprietary GALAXY BioMill CAD/CAM system and became the exclusive distributor in the U.S. and Canada of the Stratasys OrthoDesk 3D printers. Also, the Company filed 27 patent applications and was granted five patents.
According to Mr. Pignatelli, the Board's Letter, in addition to requesting that stockholders vote in favor of its Director nominees, puts forth virtually no detail concerning its plans to "achieve long-term success and deliver shareholder value" and its "new vision for the Company." Instead vague statements such as "It is our aim to be the company that captures [the global potential of laser dentistry] and continues to build on its leadership position" and "We are also taking steps to increase the pace of innovation that has been a hallmark of the BIOLASE corporate culture" strongly suggest a continuation of the business strategies that were enacted under Mr. Pignatelli's leadership. Moreover, much of the Company's current intellectual property portfolio establishing a "leadership position" is protected by patents filed and secured under Mr. Pignatelli's watch.
"BIOLASE Director nominees are in the indefensible position of incorrectly and publicly tarnishing the accomplishments of the Company under my leadership while at the same time espousing a business strategy that appears to be the one I put in place and have been advocating and advancing for years," said Mr. Pignatelli. "I am duly proud of my track record while leading BIOLASE. Despite their lack of prior direct competency in BIOLASE's core business, I encourage the Company's current Directors and management, should they feel compelled to comment publicly on my performance, to do so with a complete and accurate portrayal of my accomplishments and the circumstances under which they were achieved."
Mr. Pignatelli has served on the BIOLASE Board of Directors and/or held executive management positions at the Company for more than 20 years. While Mr. Pignatelli has endeavored tirelessly on behalf of the Company's stockholders and employees to advance a thoughtful business plan, as of late his efforts have been sabotaged by a majority of Directors with direct ties to Oracle Partners, L.P., the Company's largest shareholder. Those directors have been placed on the Board pursuant to Oracle Partners' now-clear Trojan Horse strategy, with motives that are not aligned with the interests of Company and its stockholders.
Mr. Pignatelli has been a consistent and enthusiastic champion of BIOLASE, and his personal financial interests have been closely aligned with those of the Company's other stockholders. Indeed, with a token annual salary of only $1 while serving as Chief Executive, he has been compensated for his time and expertise solely by the Company's success.
"It's a tragedy that since I departed as CEO in June, at the request of the Oracle-selected Directors, more than 30 BIOLASE employees, or approximately 15% of the Company's workforce, have resigned. While the Company's strategic foundation is its technologies, products and market opportunities, its soul is the hardworking employees who have been with the Company well before the current Board and activist stockholder appeared on the scene. I am gravely concerned about the Company's future given recent changes," Pignatelli added. "And while the Letter from my fellow Directors goes out of its way to discuss a short-term pop in stock price following the announcement of my resignation, it fails to mention that since Messrs. Clark and Nugent were named to the Board in early March the value of BIOLASE common stock has declined by some 40%."
"I attempted to nominate a full slate of five Directors including myself for consideration at the annual meeting later this month, but the nomination did not make it to a vote of BIOLASE stockholders due to an unfair strict interpretation of a technicality in the Bylaws by the Directors hand-selected by Oracle. This involved my historical and significant ownership of BIOLASE common stock being held in electronic form in a personal brokerage account instead of as a "record holder" in certificated form at the transfer agent. If my track record running the Company were as poor as purported by the Letter's distorted view of history, why would the Oracle Directors work so hard to take away the opportunity for stockholder democracy by denying stockholders an opportunity to confirm their view?"
"Notably, should Oracle's management and Directors match my performance during the period August 2010 to February 2013 in terms of percentage increases in revenue and stock performance – and without the Company's current high executive salaries, golden parachutes and other perks – I look forward to them delivering revenues approaching $200 million and a share price approaching $25 three years from now. It is my sincere hope, albeit with worried doubt, that Oracle and its agents on the BIOLASE Board, together with a circle of their investors realize a better return on their investment in BIOLASE than they have on their large and significantly underwater investments in various publicly traded companies, over which they have management influence, with a long-lasting history of losing money and under-performance, including Accelerate Diagnostics, Hansen Medical and Vermillion."
CONTACT: Ryan Baker or Jamie Marquart
Baker Marquart LLP
Source: Federico Pignatelli