Mimedx Group, Inc · NASDAQ:MDXG
Mimedx — Proxy Contest (May 2021)
42 slides from Mimedx's proxy contest presentation, May 4, 2021
Slide 1: The Case for Change at MiMedx Group, Inc. (MDXG)
CONFIDENTIAL | 1 THE CASE FOR CHANGE AT MIMEDX GROUP, INC. (MDXG)
Slide 2: Executive Summary
Executive Summary 2¢ Point is one of MiMedx's (“MDXG" or the “Company”) largest stockholders with 8.1% beneficial ownership of MDXG's wing common stock. We believe that our activist efforts for the past two and a half years have created substantial value for ALL MDXG shareholders Under the current M
Slide 3: Overview of MDXG
CONFIDENTIAL | 3 MDXG operates in two primary business segments – Biopharma and Advanced Wound Care The Biopharma segment’s flagship product is Amniofix Injectable form of human placental tissue used to treat knee osteoarthritis (“knee OA”) and other musculoskeletal ailments Currently in Phase 2b tr
Slide 4: Overview of Prescience Point
CONFIDENTIAL | 4 Overview of Prescience Point As one of MDXG’s largest shareholders, we are seeking change due to concerns over the Company’s ability to execute and deliver value to shareholders Public market investment fund that employs forensic investigative techniques to unearth significant mispr
Slide 5: Why Are We Here?
CONFIDENTIAL | 5 Why Are We Here? We have made repeated efforts to constructively engage with MDXG. Rather than work cooperatively with us, the Company has taken aggressive actions to thwart us and has mischaracterized our intentions to the public April 2020 May 2020 July 2020 January 2021 February
Slide 6: EW Healthcare Is Grossly Overrepresented On The Board
CONFIDENTIAL | 6 EW Healthcare Is Grossly Overrepresented On The Board
Slide 7: EW Representation on the Board Exceeds Its Ownership
CONFIDENTIAL | 7 With the recent appointment of Dr. Phyllis Gardner to the Board, 33% (three out of nine) of the seats on the Board are now he ld by current or former affiliates of EW, which far exceeds EW’s percentage ownership in the Company of ~17% EW’s previous designees to the Board – Martin P.
Slide 8: EW Appears To Be The Driving Force Behind Roll-Up Strategy
CONFIDENTIAL | 8 During recent investor presentations, MDXG has communicated to investors that pursuing inorganic growth opportunities (i.e. a cqu isitions), most likely in the wound care space, is one of the key pillars of its strategic plan Based on our conversations with Martin P. Sutter and Will
Slide 9: Pursuing An Inorganic Growth Strategy Would Be A Huge Blunder
CONFIDENTIAL | 9 Pursuing An Inorganic Growth Strategy Would Be A Huge Blunder And Would Result In More Value Destruction The fact that management and the Board are looking to make acquisitions in the wound care space shows a complete misunderstanding of the value drivers of the business Given that
Slide 10: Concern That EW's Board Reps May Push MDXG To Acquire EW Portfolio Companies
CONFIDENTIAL | 10 Shareholders Have Raised Concern That EW’s Board Reps May Push MDXG To Acquire EW Portfolio Companies EW’s overrepresentation on the Board, combined with its portfolio of several regenerative tissue / biologics companies, has led several shareholders to raise concerns to us that EW
Slide 11: Management's Recent M&A Comments Should Not Be Relied Upon
CONFIDENTIAL | 11 Management’s Most Recent Comments About Its Intended M&A Strategy Should Not Be Relied Upon Last week, during its Q1 2021 earnings call, management reversed course and stated that it is currently focused on organic rather than inorganic growth. We believe this sudden change in MDXG
Slide 12: Inept Investor Communications Has Suppressed Shareholder Value
CONFIDENTIAL | 12 Inept Investor Communications Has Suppressed Shareholder Value
Slide 13: Amniofix Holds Immense Promise
CONFIDENTIAL | 13 Amniofix Holds Immense Promise Our research overwhelmingly indicates that Amniofix will be a game - changing, blockbuster treatment for knee OA and other musculoskeletal ailments which is far superior to existing treatments Multiple potential indications – Clinical trials for knee
Slide 14: Sum-of-the-Parts: MDXG Shares Could Be Worth >$30
CONFIDENTIAL | 14 Based on our sum - of - the - parts analysis, we estimate that MDXG shares could be worth $32.59, and that the value of the Biopharma / Amniofix business far exceeds that of the Advanced Wound Care business Due Primarily To The Value Of Amniofix , We Believe MDXG Shares Could Be Wo
Slide 15: Potential of Amniofix Remains Hidden, Resulting In Chronic Undervaluation
CONFIDENTIAL | 15 Potential of Amniofix Remains Hidden, Resulting In Chronic Undervaluation MDXG has consistently failed to convey Amniofix’s immense promise to the investment community, leading to a chronic undervaluation of its equity MDXG management has been puzzlingly reluctant to provide detail
Slide 16: Almost Every Time Mgmt Speaks, The Share Price Declines
CONFIDENTIAL | 16 Almost Every Time Mgmt Speaks, The Share Price Declines, Resulting In Persistent Shareholder Disappointment MDXG’s share price has declined 9 out of the 11 times management has spoken publicly to shareholders, and only increased by <1% the other 2 times, since its shares were relis
Slide 17: Management's JP Morgan Healthcare Conference Presentation Was A Failure
CONFIDENTIAL | 17 Management’s Presentation At The JP Morgan Healthcare Conference Was A Failure The 2021 JP Morgan Healthcare Conference, perhaps the most important healthcare conference of the year, was a complete failure for the Company and generated little - or - no interest in its stock, as ill
Slide 18: MDXG Has Failed To Attract Meaningful Sell-Side Coverage
CONFIDENTIAL | 18 Despite its shares having been relisted on the NASDAQ for approximately 6 months, the only sell - side coverage that MDXG has been able to attract is research from Zacks and H.C. Wainwright, and one of these reports – the Zacks report – was sponsored research (i.e. paid for by the
Slide 19: The H.C. Wainwright Report Was Riddled With Errors
CONFIDENTIAL | 19 H.C. Wainwright’s initiating coverage report on MDXG was riddled with puzzling and egregious errors which reflect a failure on the part of management to accurately tell the Company’s story to the sell - side The H.C. Wainwright Report Was Riddled With Errors MDXG’s revenue from the
Slide 20: A Current Board Member Acknowledged MDXG's Messaging "Sucks"
CONFIDENTIAL | 20 A Current Board Member Recently Acknowledged That MDXG’s Messaging “Sucks” But don’t just take our word for it. After months of denial, current board member Marty Sutter finally relented and admitted that the Company’s messaging needed to be fixed During a conversation with board m
Slide 21: Share Price Increase Primarily Attributable To Our Report
CONFIDENTIAL | 21 Large Increase In MDXG’s Share Price In Late 2020 / Early 2021 Is Primarily Attributable To Our Report On December 16 th , 2020, we published a detailed report on Amniofix . Prior to the release of our report, MDXG’s share price was languishing in the $5s and $6s, meaning that the
Slide 22: Shareholders Are Frustrated And Want Change
CONFIDENTIAL | 22 Shareholders Are Frustrated And Want Change Over the past few months, several large shareholders have emailed management and the Board to express their frustrations. In their emails, these shareholders credited our report for the large share price increase since December, and urged
Slide 23: Shareholders Are Frustrated And Want Change (Cont'd)
CONFIDENTIAL | 23 Shareholders Are Frustrated And Want Change (Cont’d) “It is wonderful that MDXG has a chance to present at JPM this year…This is the company’s first time back at the most importa nt conference of the year so obviously this conference carries with it some added significance. As an i
Slide 24: Shareholders Are Frustrated And Want Change (Cont'd)
CONFIDENTIAL | 24 Shareholders Are Frustrated And Want Change (Cont’d) SHAREHOLDER #2 “ The company continues to disappoint the market from a sales and guidance perspective and just a general enthusiasm perspectiv e a s you can see from the reaction today in the stock price …If you really believe th
Slide 25: Shareholders Are Frustrated And Want Change (Cont'd)
CONFIDENTIAL | 25 Shareholders Are Frustrated And Want Change (Cont’d) SHAREHOLDER #4 “ I thought the call was a tad disappointing until Eiad got on the call and attempted to get some answers for VERY impatient shareholders ..I was being bombarded with emails during the call from other long term sha
Slide 26: MDXG Has Yet To Resolve Its Lingering Internal Control Issues
CONFIDENTIAL | 26 MDXG Has Yet To Resolve Its Lingering Internal Control Issues, Shareholders Should View This As Unacceptable Management and the Board have had more than enough time to fix MDXG’s material weakness in internal controls. However, as of today, this issue still remains unresolved. Alth
Slide 27: The Troubling, Value Destructive EW Healthcare Transaction
CONFIDENTIAL | 27 The Troubling, Value Destructive EW Healthcare Transaction
Slide 28: In July 2020, MDXG Secured $150M From EW Healthcare and Hayfin
CONFIDENTIAL | 28 In July 2020, MDXG Secured $150M Of Capital From EW Healthcare and Hayfin Capital Management On July 2 nd , 2020, MDXG announced that it had raised $150m in the form of $100m of convertible preferred stock and a $50m term loan from EW Healthcare Partners (“EW”) and Hayfin Capital M
Slide 29: The $150M Capital Raise Was Excessive And Completely Unnecessary
CONFIDENTIAL | 29 The $150M Capital Raise Was Excessive And Completely Unnecessary The Company’s decision to raise such a large amount of capital was baffling given that, at the time, it had more than sufficient liquidity and covenant cushion to fund itself for 12+ months As of June 30 th , 2020, ju
Slide 30: The Preferred Stock Was Issued At A Steep Discount
CONFIDENTIAL | 30 The Preferred Stock Was Issued At A Steep Discount, Resulting In Massive Dilution And Value Destruction As of July 1 st , 2020, the day before the deal was announced, MDXG shares were languishing and were trading at just $5.40, which was a fract ion of our estimate of fair value of
Slide 31: Preferred Terms Did Not Comply With NASDAQ's 20% Rule
CONFIDENTIAL | 31 Although MDXG was delisted at the time of its capital raise, it was in the process of applying for relisting on the NASDAQ NASDAQ requires shareholder approval for any issuance that can result in the issuance of more than 20% of the outstanding common stock or voting power at a pri
Slide 32: The Wound Care Business Has Lost Significant Market Share
CONFIDENTIAL | 32 The Wound Care Business Has Lost Significant Market Share
Slide 33: MDXG Has Lost Significant Share To Organogenesis
CONFIDENTIAL | 33 MDXG Has Lost Significant Share To Organogenesis, One Of Its Primary Competitors In The Wound Care Space MDXG reported an 11% YoY decline in sales in FY 2020 and has projected that its sales in FY 2021 will be flat YoY. By contrast, Organogenesis ("ORGO") reported a 30% YoY increas
Slide 34: ORGO's Share Price Has Drastically Outperformed MDXG
CONFIDENTIAL | 34 Not Surprisingly, ORGO’s Share Price Has Drastically Outperformed That Of MDXG 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0% 12/31/2020 1/31/2021 2/28/2021 3/31/2021 4/30/2021 Indexed Stock Price Performance MDXG ORGO
Slide 35: Changes To The Board Are Urgently Needed
CONFIDENTIAL | 35 Changes To The Board Are Urgently Needed
Slide 36: MDXG Is Entering The Most Pivotal Time For Value Creation
CONFIDENTIAL | 36 MDXG Is Entering The Most Pivotal Time For Value Creation In Its History With MDXG on the verge of publishing its clinical trial results, the Company is entering the most pivotal time in its history where tremendous value could either be created or squandered. We believe that urgen
Slide 37: Case Study: Forty Seven Sale To Gilead
CONFIDENTIAL | 37 Case Study: Forty Seven Sale To Gilead The successful sale of Forty Seven, Inc. (“FTSV”) perfectly demonstrates the massive valuation that biopharma companies with a potential blockbuster treatment, and who have a management and board that is fully - aligned with shareholders, can
Slide 38: The Entire Board Should Be Held Accountable
The Entire Board Should Be Held Accountable For The Underperformance They Have Overseen X_ Inept Investor Communications ~ The Company has failed to communicate the potential of Amniofix which has resulted a chronic tundervaluing of its equity, and also resulted in the market assigning litle-to-no v
Slide 39: Disclaimer
Disclaimer Protconce Investment Group, LLC bia Pretcicnse Point Capital Management LLC, Prescicnce Partners, LP, Pressience Point Sposial Opportunity LP, Protcience pital, LLC, Fiad Asbahi (collectively, “Pressience Point), Alfed G. Merriweather, Charlotte E. Sibley and William F. Spengler (collecti
Slide 40: Disclaimer
Disclaimer Point docs not endorse third-party eximates or research which are uted in this presentation solely for illastrative purposss. No representation or waranty, express oF implied, made that data of information, whether derived of oblained ffom filings made withthe SEC or any other regulatory
Slide 41: Disclaimer
Disclaimer significant uncertintics inherent in the proested results and forward-looking statements included in this protentation, the inclusion of such information should not be regarded as a representation as to flute results oF thatthe objetives and stratcpic initiatives expressed or implied by s
Slide 42: Disclaimer
Disclaimer Points use herein doesnot imply an afi offered by such owner. jn with, or endortement by, the owners ofthese xervice marks, trademarks and tide names or the goods and rerices sold oF