Lifecore Biomedical, Inc. (NASDAQ: LFCR) (“Lifecore” or the
“Company”), a fully integrated contract development and
manufacturing organization (“CDMO”), today announced that its Board
of Directors unanimously approved the conclusion of its review of
strategic alternatives that was initiated in March 2023, and,
concurrently therewith, announced several strategic updates related
to its operations on a stand-alone basis.
Board Concludes its Review of Strategic
Alternatives
After evaluating a full range of strategic
alternatives with the support of its advisors, Lifecore’s Board of
Directors unanimously concluded that the best way to maximize value
for stockholders at this time is to continue executing on the
Company’s standalone strategic plan. This conclusion was based on
an expansive strategic review process, including outreach to and
engagement with over 75 buyers, including both strategic buyers and
financial sponsors.
“The Board of Directors appreciates all of the
hard work put into the strategic review process by the Company and
its advisors. The Board looks forward to working with the
management team to lead the Company’s execution on its strategic
plan,” said Craig Barbarosh, Chairman of the Board.
Christopher Kiper, Lifecore Director and Chief
Investment Officer of Legion Partners Asset Management, LLC,
commented, “I am pleased with the exhaustive process the Board
undertook in conducting the strategic review, which ultimately
concluded that executing on Lifecore’s strategic plan as a
standalone company will drive the highest shareholder value. While
the past year has been challenging for the Company, I believe that
Lifecore has a bright future, and am optimistic about many
improvements in the business, including significant investments in
expanding our injectable fill/finish capacity for vials and
syringes, recent new commercial contracts, existing contract
enhancements and commercialization of new products – and the Board
continues to expect Lifecore to emerge from the trough and return
to a solid growth trajectory in the second half of fiscal
2024.”
Over the past three years, Lifecore has
strategically allocated substantial capital towards augmenting its
aseptic production capacity and expanding its development pipeline
to address the growing demand for injectable fill/finish
capabilities by the pharmaceutical industry given new innovations
they are bringing to market. With these investments, Lifecore
believes it is positioned for substantial growth as its additional
aseptic capacity becomes available. Provided Lifecore continues to
execute on its current strategic plan, including the installation
and qualification of its high-speed multi-purpose 5-head and
10-head isolator fillers, Lifecore’s theoretical annual aseptic
production capacity is estimated to more than triple the Company’s
current theoretical capacity from 22 million units to up to
approximately 70 million units in fiscal year 2027. The current
estimates for theoretical capacity have resulted from extensive
factory acceptance testing associated with the new isolator
fillers, including evaluating filling speeds and volumes, modeling
the types of product formulations under evaluation within our
pipeline. The details of Lifecore’s long-range plan will be
discussed by its management team at an Investor Day that is
anticipated to be scheduled later in calendar 2024.
With the filing of the Annual Report on Form
10-K recently completed, Lifecore has shifted its efforts towards
completing its Quarterly Report on Form 10-Q with respect to the
fiscal first quarter of 2024 and becoming current on its SEC
reports as promptly as possible. Management intends to update
investors via press release, as soon as practicable, to the date
and time for a business update conference call to discuss its
Fiscal 2024 First Quarter results and select preliminary results
for Fiscal 2024 Second and Third Quarters, once available.
Commences Leadership Transition with Naming of New
CEO
In connection with the conclusion of its
strategic evaluation process, the Company announced that it has
appointed Paul Josephs as the Company’s new President and Chief
Executive Officer, effective on May 20, 2024, upon which date Mr.
Josephs is also expected to join Lifecore’s Board of Directors.
This transition follows Jim Hall’s announcement of his intent to
retire as the Company’s President and Chief Executive Officer and
as a director of the Board effective upon Mr. Josephs’
commencement. Mr. Hall intends to continue to support the
transition for twelve months in an advisory capacity following his
retirement.
Paul Josephs brings over 30 years of
pharmaceutical industry experience to Lifecore, including over 25
years of CDMO experience. Since 2021, Mr. Josephs served as
President & Chief Executive Officer and a member of the Board
of Directors at Woodstock Sterile Solutions, a specialized
full-service CDMO. Prior to joining Woodstock, Mr. Josephs served
as Head of CDMO – Global Business Development at Viatris (formerly
known as Mylan) since 2016 when it acquired DPT Laboratories. Mr.
Josephs’ work with DPT Laboratories began in 1997, where he held
numerous progressive roles in sales and business development,
culminating with a position of Senior Vice President, Sales,
Marketing & Corporate Development. He holds a Bachelor of Arts
degree from the University of Western Ontario in Canada.
“We are excited to attract such an accomplished
executive to lead Lifecore in its next chapter of growth. Paul is a
strong leader, and we look forward to leveraging his deep
commercial experience and long-term relationships in the CDMO
business to build upon the great work of Lifecore’s team,” stated
Nelson Obus, Director and Chief Investment Officer of Wynnefield
Capital, Inc. “The Board would like to thank Jim for his unwavering
dedication to Lifecore that has spanned more than three decades. He
has been instrumental in building Lifecore into the differentiated
CDMO it is today, and we also want to recognize his leadership
through this complex process of realigning the corporate focus over
the past several years as we worked to unlock the intrinsic value
that we see in Lifecore. We wish him a well-deserved and fruitful
retirement.”
Mr. Josephs, commented, “I am thrilled to join
Lifecore and look forward to engaging with the team to continue
servicing its customers and drive the business to new heights. Jim
built a terrific culture and a strong reputation within the
specialty CDMO industry of quality and service – characteristics
that are of the utmost importance to me. The team has also built an
excellent foundation for growth. I believe the business is at an
inflection point and see exciting opportunities to utilize the
growing capacity from Lifecore’s two new isolator fillers through
the cultivation and expansion of its development pipeline. I look
forward to bringing my commercial experience to bear and work
together to help Lifecore take the next step in its commercial
evolution.”
Mr. Hall, said “It has been an honor to work
with all of the wonderful people at Lifecore over the course of my
career – as well as with our valued customers, who have come to
rely on our unrelenting focus on quality and performance. Following
our transition to a stand-alone CDMO focused business, Lifecore has
a solid foundation in place which gives me comfort that now is the
right time for my retirement. I’d like to thank the Board for their
support and look forward to supporting Paul as he transitions into
his role as CEO.”
Announces Pending Board
Changes
Craig Barbarosh, the Company’s Board Chair, has
informed the Board of Directors that he intends to not stand for
reelection at the upcoming Fiscal 2023 Annual Shareholders Meeting.
The Board has named current independent director, Katrina Houde, as
its Chairperson, effective at the upcoming Annual Shareholders
Meeting. The resulting Board will be composed of eight members.
Katrina Houde, Director of Lifecore stated, “On
behalf of the entire Board of Directors, I want to express our
appreciation for Craig’s leadership as Board Chair and director
over the past five years. His guidance was invaluable in setting
the Company’s strategic initiative to refocus resources on our
highest performing assets, which resulted in several asset
dispositions that were necessary to raise the prominence of the
Lifecore organization. We wish him well in his future
endeavors.”
About Lifecore
BiomedicalLifecore Biomedical, Inc. is a fully integrated
contract development and manufacturing organization (CDMO) that
offers highly differentiated capabilities in the development, fill
and finish of complex sterile injectable pharmaceutical products in
syringes and vials. As a leading manufacturer of premium,
injectable grade Hyaluronic Acid, Lifecore brings more than 40
years of expertise as a partner for global and emerging
biopharmaceutical and biotechnology companies across multiple
therapeutic categories to bring their innovations to market. For
more information about the Company, visit Lifecore’s website at
www.lifecore.com.
Important Cautions Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements regarding future events and our future
results that are subject to the safe harbor created under the
Private Securities Litigation Reform Act of 1995 and other safe
harbors under the Securities Act of 1933 and the Securities
Exchange Act of 1934. Words such as “anticipate”, “estimate”,
“expect”, “project”, “plan”, “intend”, “believe”, “may”, “might”,
“will”, “should”, “can have”, “likely” and similar expressions are
used to identify forward-looking statements, including but not
limited to statements regarding our future operational or financial
performance, our future strategic pans and anticipated changes in
our management and board of directors. All forward-looking
statements involve certain risks and uncertainties that could cause
actual results to differ materially, including such factors among
others, as the outcome of any evaluation of the Company’s strategic
alternatives or any discussions with any potential bidders related
thereto, the Company’s ability to become current with its reports
with the Securities and Exchange Commission (the “SEC”), and the
timing thereof, the ability of the Company to successfully
effectuate its strategic plan on its anticipated timeline, or at
all, the decisions of third-party individuals regarding future
employment, future strategic outreach from third parties, the
Company’s ability to regain compliance with applicable listing
standards under Nasdaq, and its ability expand its relationship
with its existing customers, as well as such other risks described
in our most recent Annual Report on Form 10-K. For additional
information about factors that could cause actual results to differ
materially from those described in the forward-looking statements,
please refer to our filings with the Securities and Exchange
Commission, including the risk factors contained in our most recent
Annual Report on Form 10-K. Forward-looking statements represent
management’s current expectations and are inherently uncertain.
Except as required by law, we do not undertake any obligation to
update forward-looking statements made by us to reflect subsequent
events or circumstances.
Contact Information:Investor
RelationsJeff Sonnek(646) 277-1263jeff.sonnek@icrinc.com
Media RelationsDan McDermott(646)
577-1811dan.mcdermott@icrinc.com
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