NEW YORK, March 11, 2010 (GLOBE NEWSWIRE) -- Arcadia Capital Advisors, LLC and managing director, Richard S. Rofé ("Rofé") noted today that they resubmitted on February 19, 2010, to CPEX Pharmaceuticals, Inc., (Nasdaq:CPEX) their original demand letter of January 29, 2010, requesting permission to inspect CPEX's books, records and documents and make copies pursuant to Section 220 of Delaware General Corporate Law in contemplation of Richard Rofé's nomination and candidacy to serve on CPEX's Board of Directors to be voted on at the upcoming 2010 CPEX Annual Meeting of shareholders. Arcadia's initial Demand Letter was refused by CPEX in a response letter dated February 3, 2010.
Rofé also wishes to respond to a public statement by CPEX that, "On February 22, 2010, the Company requested additional information regarding whether Rofé intends to make an offer and, if so, how he intends to finance the offer. To date, neither Rofé nor Arcadia has clarified whether or not either is financially capable or intends to commence the tender offer." Rofé states the following:
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Rofé has been consistently clear in all communications to the CPEX Board of Directors and CPEX management that he has a strong interest in making an all-cash tender offer for CPEX for $14 per share and, further, that Rofé's preference would be to negotiate with the CPEX Board with a goal of making a "friendly" offer for the Company;
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Rofé remains open to direct negotiation with the CPEX Board of Directors on all aspects of this prospective tender offer including contemplated price;
- Rofé notes that he has no interest in or responsibility to make his personal financial statements public and, separately, Rofé reiterates that he remains fully capable of financing a prospective all-cash tender offer for CPEX without the need for bank financing or a financing contingency.
Rofé stated, "As part of a group that is CPEX's largest independent shareholder, I find it curious that the CPEX Board would be unwilling to meet with me to negotiate the terms of a friendly offer -- and instead ostensibly focus on whether or not Arcadia and/or I have sufficient resources to undertake an all-cash tender offer for the Company. This is particularly curious given President and CEO John Sedor's longstanding focus on a business strategy that leads to consistent net losses (most recently for full year 2009 a $3 million net loss on $18.7 million in revenue) that destroys shareholder value while senior CPEX management remains extraordinarily and excessively compensated relative to a representative sample of peer companies."
Separately, Rofé notes that in CPEX's recently announced fourth quarter and full year financial results, CPEX inexplicably failed to provide shareholders with any update on the status of the Nasulin Phase 2a clinical study underway or any meaningful discussion of, or comment on, operating results or financial guidance. At the time of the announcement of the Phase 2a study, the Company forecast that a Phase 2b study of Nasulin could be initiated in the second half of 2009. Since then, the Company has been unwilling or unable to provide regular updates on the status of the Phase 2a trial or the reason or reasons behind the Company's initial, excessively optimistic timetable for Phase 2a study completion and possible next steps.
Rofé stated, "I encourage the CPEX Board of Directors to engage in constructive dialog with me on terms of a prospective, friendly all-cash tender offer. To date, the Board has hidden behind a 'wall of silence', indicating their unwillingness to place the best interests of all shareholders ahead of those of entrenched and excessively compensated senior management. Absent some change in behavior, however, it remains my contention and firm belief that the CPEX Board of Directors is failing to fulfill its fiduciary responsibility to its shareholders, and its independent Board members are failing to demonstrate true independence from management. Indeed, CPEX's recent efforts to spend scarce corporate resources to secure additional legal, communications and investment banking advisors, at considerable shareholder expense, strongly suggests to me that in fact the Board is working in opposition to shareholder interests. I will note for the record, however, that the status quo of gross mismanagement and excessive management compensation at CPEX is no longer going be an accepted or tolerated practice by the firm's largest independent shareholder."
Rofé concluded, "It is quite sad that fundamental U.S. governance standards are so commonly subject to abuse and subjective interpretation in cases such as CPEX where a Board of Directors is weak, distant and ill-informed and its CEO appears to be unchecked in his reckless pursuit of a product which offers no meaningful return on investment. As I move forward with my candidacy to join this failed Board and help effect positive change for the Company and its maligned shareholders, I appreciate the broad support I have received from both individuals and institutional investors that are dissatisfied with the current direction and ongoing mismanagement of CPEX Pharmaceuticals."