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“… an underperformance of ADVM shares, relative to the benchmark index, that is substantially worse than that of its gene therapy peers, notwithstanding the read through effect of ostensibly unrelated developments.”
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“During the tenure of the newly appointed CEO, through the March 17, 2021, unaffected date when Sonic's proxy contest became public, ADVM
shares returned (54.6) percent, 82.8 percentage points below the peer median and 76.4 percentage points below the Nasdaq Biotech Index.”
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“It is difficult … to dismiss the fact that a
potential issue the dissident has been warning about all along has actually come to pass – despite the company's previous assurances regarding the safety of ADVM-022 – in the sense that a clinical trial patient (for DME)
experienced inflammation and subsequently lost vision in one eye.”
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“It is worth noting that the dissident
nominees have strong backgrounds in gene therapy and finance, and therefore seem well qualified to provide investors with an independent assessment of the aforementioned concerns; by contrast, the management nominees include an
incumbent director who had indicated his intention to resign prior to the dissident campaign, and two new appointees who, while well qualified, seem to possess skill sets that appear less critical to the board under current
circumstances.”
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“Non-employee directors Patrick Machado and Scott Whitcup received total compensation in the last fiscal year of $762,858 and $1,081,988,
respectively. These amounts are significant outliers as compared to non-employee directors in the same industry and index. This represents a
cost to shareholders and raises questions about the impact on director independence.”
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“Given that the two settlement nominees, who were appointed in 2019, appear supportive of the company's position in this fight, we do not
consider them to be "dissident" directors for the purposes of this analysis. Moreover, the three dissident nominees this year, like the 2019
nominees, do not appear to have any preexisting ties to Sonic.”
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“The dissident's nominees … would be
independent voices on the board. By contrast, all three of the management nominees appear to have preexisting ties to the chairman or CEO.”
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“Putting to one side, for a moment, all arguments about experience and expertise, following the April 28 update from the company there may be a fundamental need for unquestionable independence in Adverum's boardroom, as investors seek urgent reassurance regarding the
board's oversight of key issues, such as the inflammation during trials and capital allocation decisions.”
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“Given that recent events have likely delayed the prospect of commercialization, placing far greater emphasis on the testing and regulatory
approval process, Bennett and Cook's expertise seems highly relevant.”
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“The 60 percent decline in the share price in reaction to the company's SUSAR disclosure, coupled with multiple Wall Street downgrades and
price target reductions, are indicative that it may be much more costly than previously believed for Adverum to raise the financing that will be needed to eventually see this treatment through to commercialization. This would appear to support the need for additional financial experience and investor perspective on the board.”
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“… [T]he tactics employed by board over the
course of this proxy campaign, which it justifies as necessary to maximize long-term value for shareholders, seem questionable, particularly if the board is indeed confident that a significant percentage of its shareholder base
opposes Sonic's continued efforts.”
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“It appears that the company selectively
provided just the opening sentences of an email from the dissident so as to make it appear that Sonic is trying to restore the former Avalanche CEO. There also appears to be an outsized influence exerted by the chairman over the size of the board, its additions, and its exits.”
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“It is disconcerting that the board, which cooperated with Sonic to reach a compromise in 2019, appears to have adopted a “brute force” response this year with tactics that imply its end, maximizing shareholder value, justifies any means, including mischaracterizing the
dissident's statements, reducing the time between filing the proxy and holding the shareholder meeting, leaving the future board size to be determined, and re-nominating director Woiwode.”
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“As of March 1, Woiwode had made a decision not to continue as a director – he either had other priorities or believed his contribution was no
longer necessary. Despite that, the board is keeping him on for seemingly tactical purposes, to shut out the dissident's nominees –
all of whom seem highly engaged and interested in helping the company address its current crisis.”
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“The board feels comfortable that the current regimen for mitigating inflammation, topical steroid eyedrops, is optimal. Simultaneous with that,
it indicates that inflammation mitigation is a top priority and it seeks improvement, experimenting with different dosages (which may demonstrate effectiveness with lesser inflammation), enhancing the purity of its manufacturing process,
and planning a study of intravitreal, rather than topical, steroids. In engagement with ISS, the board indicated that it believes
steroid eyedrops are the best approach to controlling inflammation at the front of the eye, but the company can explore other options to improve how steroids control the inflammation, and, if it exhausts steroids as a mitigation tool, it
can look at other potential solutions.”
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If you have any questions regarding your GREEN proxy card or need assistance in voting your shares, please contact
Saratoga Proxy Consulting, LLC
520 8th Avenue
New York, NY 10018
Stockholders may call toll-free: (888) 368-0379
Banks and brokers call: (212)
257-1311
info@saratogaproxy.com
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