ILJIN SNT Co., Ltd. (“ILJIN”), a founding shareholder of Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH, TSX: AUP) (“Aurinia” or the “Corporation”), which together with certain affiliates holds an approximate 14% ownership interest in Aurinia, today issued an open letter to Aurinia shareholders from ILJIN Group Chairman, Mr. Chin Kyu Huh.
Full text of the letter follows:
June 20, 2019
Dear fellow Aurinia Shareholder,
On June 3, 2019, we, ILJIN SNT Co., Ltd. and its affiliated companies (collectively, the “ILJIN Group”), filed an information circular (the "Circular") seeking to replace three incumbent directors with more capable and independent directors at the upcoming Annual General Meeting of Shareholders of Aurinia Pharmaceuticals Inc. (“Aurinia” or the “Company”) to be held on June 26, 2019.
ILJIN Group is a long-term investor and the largest shareholder of Aurinia, holding 14.94% of the issued and outstanding shares of Aurinia, as of May 9, 2019. We have strongly believed in the potential of Voclosporin and have consistently supported Aurinia by serving as an anchor investor in all major financings.
This anchor shareholder position has been critical to the Company’s success to date and we want to make it clear that our interest in Aurinia is in complete alignment with your interest in Aurinia. We are focused on helping the Company achieve its full potential.
While election contests can be distracting, we have concluded that the benefits expected from the change called for will clearly surpass any potential disruptive impact on the Company.
As the founder and the chairman of ILJIN Group, for more than 50 years, I have been actively involved with many companies of various sizes in diverse industries worldwide. I have been fortunate enough to grow ILJIN Group into a business conglomerate consisting of 28 affiliated companies with approximately 4,000 dedicated employees, achieving approximately $3 billion of annual revenues.
For several years, I have hoped to share our business experience and resources with Aurinia so that the Company can be a Canadian biotech success story, benefiting all shareholders. Since our initial investment, however, the Company’s governance and the strategic decisions made by the incumbent board have caused us significant concern. We have recommended the separation of the CEO and the Chairman role, moving the Company operation to a larger city with better access to resources, to structure executive compensation to align with actual performance, strengthening strategic business development activities and intellectual property, to improve share performance and corporate governance, and reducing excessive corporate expenses.
To my disappointment, despite our good faith efforts, the former CEO and Chairman of the Board, Mr. Glickman, failed to take any meaningful action in response to our good faith suggestions for improvement. Even following Mr. Glickman’s departure (notwithstanding his continued service as an advisor) the incumbent board has failed to take any adequate steps to address the concerns of shareholders.
You may think Aurinia has been generally progressing well with its clinical studies, and as long as positive data comes out of its clinical studies, the remaining operational and governance issues are less important and do not warrant any change in the board composition.
However, based on my long experience, running an efficient operation and implementing proper governance practices are very important; any significant deviation or non-compliance pose critical risks to any company and its market value. For example, retaining and rewarding qualified employees with the right compensation plan is essential to a company’s success. Creating a dedicated and empathetic culture where employees work hard and act in the best interests of the company’s stakeholders, and not just their own personal interests, is equally important to becoming a great company. Therefore, if the board and management fail to take adequate measures to properly address these important issues, they should be held responsible for their failure to do so.
Fortunately, Mr. Glickman has retired and Aurinia has a more experienced CEO. We fully support Mr. Greenleaf as a new CEO and have high expectations that he will drive the Company in the right direction and maximize its true value.
Nevertheless, we are quite concerned about potential interference by the former CEO and Chairman and his close relationship with the majority of the other incumbent directors. This is crystal clear in the board and Mr. Glickman’s attempt to install Mr. Glickman’s close friend, Mr. MacKay-Dunn, as a new director. This is even more concerning given the actions of Mr. Glickman to threaten one of our director candidates using improperly obtained confidential Company information regarding our nominations.
All shareholders should be concerned that the current board members have been hand-picked by Mr. Glickman and are heavily interconnected with each other. What happens when our new CEO deviates from his predecessor’s footsteps? There is no objectivity. There is only self-interest and isolated loyalties.
In these circumstances, we believe that the only way to push Aurinia to make the needed changes and to give the new CEO the freedom to grow the Company, is by making the Board truly independent and strengthening its supervising function over the Company. This is why we want to replace three incumbent directors with new independent nominees that have superior capabilities and experience. We stand at the cusp of success. But that success will only be realized to its fullest through proper stewardship.
Aurinia is not owned by the former CEO and Chairman of the Board, Mr. Glickman. We, the shareholders, control the destiny of Aurinia.
If we want to improve Aurinia and maximize our investment return, we have to change the Board – now – before it is too late. We need your support to bring the change necessary to make Aurinia a great company.
Please vote for the three independent directors nominated by us: Dr. Robert Foster, the inventor of Voclosporin and a co- founder of the Company; Mr. Soon-Yub (Samuel) Kwon, a US attorney with 30 years of international legal and corporate experience; and Dr. Myeong-Hee Yu, a renowned scientist with over 30 years of proven international leadership experience.
We thank you for your support.
Sincerely,
/s/
Chin Kyu Huh, Chairman
Shareholders are urged to read the circular and vote ONLY the GREEN proxy or GREEN VIF on or before 5:00 p.m. (Mountain time) on June 21, 2019, so that it can be deposited in advance of the proxy cut-off. Shareholders who have already voted and wish to change their vote in support of the three independent nominees can do so by simply executing the Green proxy, as a later dated Green proxy will cancel an earlier vote. Shareholders requiring any assistance in executing their GREEN proxy or voting instruction form, can call Gryphon Advisors Inc. at: 1-833-266-0365 or 1-416-661-6592 or email inquiries@gryphonadvisors.ca.
For ease of voting, shareholders are encouraged to visit www.AHealthierAurinia.com and click on the “Vote Now” button. A copy of the information circular is available on Aurinia’s SEDAR profile at www.sedar.com.
Advisors and Counsel
Stikeman Elliott LLP is acting as Canadian legal counsel to ILJIN. Gryphon Advisors Inc. has been engaged as proxy solicitation agent and Gagnier Communications has been engaged by ILJIN as communications advisor.
Legal Notices and Disclaimers
The data, information and opinions contained or referenced herein (collectively, the “Information”) is for general informational purposes only for the shareholders in order to provide the views of ILJIN regarding certain changes that it is requesting to the composition of the Aurinia board of directors and other matters which it believes to be of concern to shareholders described herein. The Information is not tailored to specific investment objectives, the financial situation, suitability or particular need of any specific person(s) who may receive the Information and should not be taken as advice in considering the merits of any investment decision. The views expressed in the Information represent the views and opinions of ILJIN, whose opinions may change at any time and which are based on analysis of disclosure and filings with respect to and/or made by Aurinia and other issuers that we consider to be comparable to Aurinia, and from other third party reports (see “Disclaimer Respecting Publicly Sourced Information” in ILJIN’s circular dated June 2, 2019 (the “Circular”), a copy of which is available on SEDAR at www.sedar.com or on www.aHealthierAurinia.com). ILJIN disclaims any obligation to publicly update the Information, except as required by applicable law.
The Information contains forward-looking statements or forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"), including in respect of ILJIN and the impact of ILJIN’s Nominees on the Corporation. All statements and Information, other than statements of historical fact, contained or referenced herein are forward-looking statements and forward-looking information, including, without limitation, statements regarding activities, events or developments that ILJIN expects or anticipates may occur in the future. Such forward-looking statements and information can be identified by the use of forward-looking words such as “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue” or similar words and expressions or the negative thereof. There can be no assurance that the plans, intentions or expectations upon which such forward-looking statements and information are based will occur or, even if they do occur, will result in the performance, events or results expected.
ILJIN cautions readers not to place undue reliance on forward-looking statements and information contained or referenced herein, which are not a guarantee of performance, events or results and are subject to a number of risks, uncertainties and other factors that could cause actual performance, events or results to differ materially from those expressed or implied by such forward-looking statements or information, including but not limited to those set forth in the Circular under the heading “Forward-Looking Statements and Information” and those risks and uncertainties detailed in the continuous disclosure and other filings of Aurinia and certain members of Aurinia’s peer groups with applicable securities regulatory authorities, copies of which are available on SEDAR at www.sedar.com or on the Electronic Data Gathering, Analysis, and Retrieval at www.sec.gov. Shareholders are urged to carefully consider those factors.
The forward-looking statements and information contained or referenced herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and information contained or referenced herein are made as of the date of the ILJIN Circular and ILJIN undertakes no obligation to publicly update such forward-looking statements or information to reflect new information, subsequent events or otherwise, except as required by applicable laws.
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