Alaunos Therapeutics, Inc. · NASDAQ:TCRT
Alaunos Therapeutics — Ziopharm Oncology — Proxy Contest (November 2020)
57 slides from Alaunos Therapeutics's proxy contest presentation, Nov 19, 2020
Slide 1: The Need for Change Atop Ziopharm
THE NEED FOR CHANGE ATOP ZIOPHARM NOVEMBER 2020
Slide 2: Disclaimer
DISCLAIMER THIS PRESENTATION IS FOR DISCUSSION AND GENERAL INFORMATIONAL PURPOSES ONLY. IT DOES NOT HAVE REGARD TO THE SPECIFIC INVESTMENT OBJECTIVE, FINANCIAL SITUATION, SUITABILITY OR THE PARTICULAR NEED OF ANY SPECIFIC PERSON WHO MAY RECEIVE THIS PRESENTATION, AND SHOULD NOT BE TAKEN AS ADVICE ON
Slide 3: Table of Contents
TABLE OF CONTENTS EXECUTIVE SUMMARY THE CASE FOR MEANINGFUL CHANGE OUR SOLUTION: THE WATERMILL SLATE A VISION FOR FIXING ZIOPHARM 3
Slide 4: Executive Summary
FIX ZIOPHARM EXECUTIVE SUMMARY
Slide 5: About WaterMill
ABOUT WATERMILL WaterMill is a family office and long-term shareholder of Ziopharm. • WaterMill is led by Robert Postma, who has decades of experience investing across equity and fixed income markets. • WaterMill has more than $100 million in total investments across traditional and alternative asse
Slide 6: About Ziopharm
ABOUT ZIOPHARM Ziopharm is an immuno-oncology company focused on developing individualized, cost-effective therapies for certain types of cancer and solid tumors. Ziopharm’s Strategic Focus and Core Assets Ziopharm Financial Snapshot* • Ziopharm specializes in developing non-viral and cytokine-drive
Slide 7: The Board Has Presided Over Staggering Losses
THE BOARD HAS PRESIDED OVER STAGGERING LOSSES The Company’s negative returns and underperformance are indefensible over every relevant time horizon. Ziopharm S&P 500 Russell 3000 SPDR S&P Biotech ETF 100.00% 90.33% 87.84% 83.19% 80.00% 60.00% 52.53% 44.63% 43.19% 39.17% 40.00% 18.50% 19.18% 20.00% 0
Slide 8: The Board Has Fostered Terrible Governance
THE BOARD HAS FOSTERED TERRIBLE GOVERNANCE Before and after Ziopharm’s self-directed Board refresh, the Company’s governance and Board oversight have been dismal. The incumbent Board has a record of… Disregarding the Need for a Allowing Interlocking Championing Dilutive Transparent Capital Director
Slide 9: The Board Has Repeatedly Rebuffed Shareholders and Maintains Poor Practices
THE BOARD HAS REPEATEDLY REBUFFED SHAREHOLDERS AND MAINTAINS POOR PRACTICES • The Board has continuously disregarded shareholders’ desire for a credible and truly independent director refreshment. o A majority of voting shareholders withheld support for three directors – Mr. Scott Braunstein, Mr. El
Slide 10: The Board Blindsided Shareholders With This Year's Raise
THE BOARD BLINDSIDED SHAREHOLDERS WITH THIS YEAR’S RAISE Ziopharm contradicted its own statements when announcing an opaque ~$90 million raise with Jefferies and in our view, harmed sizable supportive shareholders. • In an August 2019 press release announcing financial results, Ziopharm stated the f
Slide 11: The Board Is Led by a Highly-Questionable Chairman
THE BOARD IS LED BY A HIGHLY-QUESTIONABLE CHAIRMAN We believe Scott Tarriff, who became Chairman in 2018 after joining the Board in 2015, has a concerning public history of questionable behavior, troubling lawsuits and shareholder value destruction. • In a lawsuit involving Mr. Tarriff’s former empl
Slide 12: WaterMill Believes Meaningful, Urgent Change Is Needed
WATERMILL BELIEVES MEANINGFUL, URGENT CHANGE IS NEEDED With abysmal governance and no material value creation in sight, we believe Ziopharm is on a path to financial ruin and is squandering the tremendous promise trapped within its scientific assets. The Company has lost 75% The Company has already
Slide 13: This Week's Director Appointment Reinforces Our Case for Change
THIS WEEK’S DIRECTOR APPOINTMENT REINFORCES OUR CASE FOR CHANGE We believe the facts validate our view that the appointment of Mary Thistle is a desperate and insincere entrenchment maneuver and that her addition falls woefully short of the change required at Ziopharm. • Although Ziopharm’s November
Slide 14: Our Solution: Reconstituting the Board Immediately
OUR SOLUTION: RECONSTITUTING THE BOARD IMMEDIATELY We want to reconstitute the eight-member Board by removing four current directors and adding three highly-qualified individuals with complementary experience, necessary expertise and ownership perspectives. Robert Postma Jaime Vieser Holger Weis • T
Slide 15: Our Solution: Director Candidates With Strong Skills
OUR SOLUTION: DIRECTOR CANDIDATES WITH STRONG SKILLS In contrast to the incumbent directors, we believe our director candidates bring the skills and experience necessary to constitute a well-rounded Board that can help fix Ziopharm. Audit & Business Capital Strong Transaction & Track Record C-Level
Slide 16: Our Solution: An Actionable, Shareholder-Friendly Vision
OUR SOLUTION: AN ACTIONABLE, SHAREHOLDER-FRIENDLY VISION In addition to suggesting that the Board commence an overall strategic review of the business, we want to work with our fellow directors to enhance governance and facilitate prompt corporate improvements: Ensuring Transparent Fixing Lingering
Slide 17: Sizable Shareholders Support Our Highly-Qualified Slate
SIZABLE SHAREHOLDERS SUPPORT OUR HIGHLY-QUALIFIED SLATE Our slate’s fresh perspectives and its solutions resonate with shareholders. “ We believe the changes proposed will help unlock the substantial hidden value in the shares of “ We believe WaterMill’s proposed new board members possess the busine
Slide 18: The Case for Meaningful Change
THE CASE FOR MEANINGFUL CHANGE
Slide 19: Our Rationale for Removing 50% of the Current Board
OUR RATIONALE FOR REMOVING 50% OF THE CURRENT BOARD WaterMill believes there is a clear rationale for removing J. Kevin Buchi, Elan Z. Ezickson, Scott Tarriff, and Mary Thistle. • All four of the aforementioned directors lack meaningful shareholdings and sorely-needed ownership perspectives. • All f
Slide 20: Sustained Value Destruction Under Current Leadership
SUSTAINED VALUE DESTRUCTION UNDER CURRENT LEADERSHIP Shareholders have suffered severe losses over several relevant time horizons. Ziopharm’s Total Shareholder Returns (“TSR”) 0% -10% -20% -30% % Returns -40% -39.31% -50% -60% -52.43% -70% -80% -76.28% -90% 1-Year TSR 3-Year TSR 5-Year TSR Since Cha
Slide 21: Staggering Underperformance Despite Economic Growth
STAGGERING UNDERPERFORMANCE DESPITE ECONOMIC GROWTH Ziopharm has dramatically underperformed against the broader market and biotech peers and for years. 1-Year TSR 3-Year TSR 5-Year TSR Ziopharm -39.31% -52.43% -76.28% S&P 500 18.50% 44.63% 90.33% Russell 3000 19.18% 43.19% 87.84% SPDR S&P Biotech E
Slide 22: Expenses Have Swelled as Value Has Eroded
EXPENSES HAVE SWELLED AS VALUE HAS ERODED Ziopharm has misallocated a tremendous amount of capital to seemingly opaque R&D and G&A costs. Ziopharm Operating Expenses ($ in millions) $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 2016* 2017 2018 2019 2020** R&D G&A Oper Ex
Slide 23: Lackadaisical Business Management and Oversight
LACKADAISICAL BUSINESS MANAGEMENT AND OVERSIGHT We believe Ziopharm’s leadership has missed numerous opportunities to unlock value for shareholders through strategic transactions and potential partnerships. • Ziopharm has gone on for years without a partnership deal that would further validate the C
Slide 24: Misaligned Executive Management
MISALIGNED EXECUTIVE MANAGEMENT While shareholders have endured awful returns, we believe Ziopharm’s Board has rubberstamped excessive and unjustifiable management compensation – including raises. • From 2018 to 2019, all of the Company’s eligible named executive officers received base compensation
Slide 25: Nebulous "Incentive Objectives" for Executives
NEBULOUS “INCENTIVE OBJECTIVES” FOR EXECUTIVES We believe the incumbent Board has set low corporate goals to ensure management receives rich payouts, while shareholders get decimated. • Ziopharm’s 2019 corporate targets were so within reach that each executive officer achieved 100% of his individual
Slide 26: The Board Has Failed to Instill a Sense of C-Suite Urgency
THE BOARD HAS FAILED TO INSTILL A SENSE OF C-SUITE URGENCY As shareholders have suffered in recent years, we believe the Board has allowed Dr. Cooper to work remotely, waste investor resources on travel and operate lackadaisically. Dr. Cooper Resides 2,300+ Miles From Ziopharm’s Dr. Cooper’s Commuti
Slide 27: Lack of Pipeline Level Progress
LACK OF PIPELINE LEVEL PROGRESS Ziopharm has failed to progress its attractive immuno-oncology pipeline. Sleeping Beauty TCR-T Ad-RTS-hIL-12 + veledimex Sleeping Beauty CAR-T targeting neoantigens • For the past two years, Ziopharm repeatedly • Despite having successfully established safety of • Sin
Slide 28: Concerning Boardroom Issues
CONCERNING BOARDROOM ISSUES The incumbent Board is plagued by serious governance issues, which we believe prevent shareholders from realizing the true value of their investment. WE BELIEVE THE FOLLOWING BOARDROOM ISSUES PLAGUE ZIOPHARM TO THE DETRIMENT OF SHAREHOLDERS INEFFECTIVE BOARD “REFRESH” IN
Slide 29: Boardroom Issue #1: An Ineffective Self-Directed Refresh
BOARDROOM ISSUE #1: AN INEFFECTIVE SELF-DIRECTED REFRESH Ziopharm’s share price is down nearly 40% following a seemingly self-directed Board “refreshment” in 2018. • In September 2018, Ziopharm added Scott Braunstein and Elan Z. Ezickson to the Board. • This move followed months of terrible performa
Slide 30: Boardroom Issue #2: Poor Business Acumen and Decisions
BOARDROOM ISSUE #2: POOR BUSINESS ACUMEN AND DECISIONS We believe the Board has made numerous strategic missteps and business blunders, which have resulted in hundreds of millions of dollars in value destruction. A timeline of the current Board’s terrible business decisions: Ziopharm states at J.P.
Slide 31: Boardroom Issue #3: Lack of Capital Allocation Discipline
BOARDROOM ISSUE #3: LACK OF CAPITAL ALLOCATION DISCIPLINE The Board has not been transparent with shareholders regarding its capital allocation policy. Ziopharm has overpromised and underdelivered, leaving shareholders with many questions unanswered: Why does so much capital continue to be committed
Slide 32: Boardroom Issue #4: Weak Oversight of Financial Controls
BOARDROOM ISSUE #4: WEAK OVERSIGHT OF FINANCIAL CONTROLS The incumbent Board has permitted financial control issues to persist. • As of December 31, 2019, March 31, 2020, June 30, 2020, and September 30, 2020, management identified a material weakness in the design and effectiveness of Ziopharm’s in
Slide 33: Boardroom Issue #5: Disdain for Shareholder Feedback
BOARDROOM ISSUE #5: DISDAIN FOR SHAREHOLDER FEEDBACK We believe shareholders have been systemically disregarded and deprioritized under the incumbent Board. • A majority of voting shareholders withheld support for three directors – Mr. Braunstein, Mr. Ezickson, and Mr. Pagán – at this year’s annual
Slide 34: Boardroom Issue #5: Disdain for Shareholder Feedback (Cont.)
BOARDROOM ISSUE #5: DISDAIN FOR SHAREHOLDER FEEDBACK (CONT.) The margin by which the current Board was elected during this year’s annual meeting was razor thin. Braunstein, Ezickson, and Pagán received a majority of WITHHOLD votes. Every other director received a significant number of WITHHOLD votes
Slide 35: Boardroom Issue #6: Insufficient Ownership Perspectives
BOARDROOM ISSUE #6: INSUFFICIENT OWNERSHIP PERSPECTIVES The entire Board collectively owns less than 1.3% of Ziopharm’s outstanding shares. • In direct contrast, our slate of director candidates collectively owns more than 3.3% of Ziopharm’s shares. • With the exception of Dr. Cooper, no Board membe
Slide 36: Boardroom Issue #7: Unjustifiable Compensation
BOARDROOM ISSUE #7: UNJUSTIFIABLE COMPENSATION We believe both the Board and management team have paid themselves handsomely while shareholders suffer. All of Ziopharm’s eligible named executive officers receive base compensation raises from the Board’s Ziopharm’s share price plummets compensation c
Slide 37: Boardroom Issue #8: Concerning Director Connectivity
BOARDROOM ISSUE #8: CONCERNING DIRECTOR CONNECTIVITY Among Ziopharm’s current and recent directors, there is a troubling amount of interconnectedness and overlap in board service at other companies. We believe this threatens Board independence and effective oversight. Douglas Pagán J. Kevin Buchi El
Slide 38: We Believe the Board Has the Wrong Chairman
WE BELIEVE THE BOARD HAS THE WRONG CHAIRMAN We believe Mr. Tarriff is a highly questionable Chairman with a checkered past. • In 2006, Mr. Tarriff was a target of multiple lawsuits and was ultimately asked to resign as Chief Executive Officer of U.S. drug maker Par Pharmaceutical, which was plagued
Slide 39: For Years, the Board Let Dr. Braunstein Serve as a Distracted and Conflicted Director
FOR YEARS, THE BOARD LET DR. BRAUNSTEIN SERVE AS A DISTRACTED AND CONFLICTED DIRECTOR While at Ziopharm, Dr. Braunstein also served as a CEO and on numerous other Boards. • In 2020, ISS recommended shareholders WITHHOLD votes for the election of Dr. Braunstein to the Board due to his numerous Dr. Sc
Slide 40: Poor Governance Has Its Origins From RJ Kirk Era
POOR GOVERNANCE HAS ITS ORIGINS FROM RJ KIRK ERA Related party transactions and interlocking relationships permeate the boardroom. • January 6, 2011 – October 5, 2018: RJ Kirk served on Ziopharm’s Board. • September 6, 2011 – February 15, 2018: Ceasar Belbel was Ziopharm’s COO, and EVP, Chief Legal
Slide 41: The Board Has Lost All Credibility
THE BOARD HAS LOST ALL CREDIBILITY Shareholders agree that fresh perspectives are long overdue on Ziopharm’s seemingly self-serving Board. “ Thank you for finally attempting to grab the wheel and take control away from the incompetent BOD at “ This move to bring in dedicated Ziopharm. The technology
Slide 42: Our Solution: The WaterMill Slate
OUR SOLUTION: THE WATERMILL SLATE
Slide 43: WaterMill Has Put Forth a Well-Rounded Slate
WATERMILL HAS PUT FORTH A WELL-ROUNDED SLATE Robert Postma Jaime Vieser Holger Weis ✓ Principal and founder of WaterMill Asset ✓ Manager of Brushwood LLC, a private investment ✓ Two decades of various c-level business and Management Corp. firm strategy roles at life science companies ✓ Four decades
Slide 44: Robert Postma
ROBERT POSTMA Robert Postma has over 40 years of investment management experience with strong capital allocation acumen and a track record of success engaging with healthcare and biotechnology companies. For over two decades, Mr. Postma has served as the principal of WaterMill Asset Management, an a
Slide 45: Endorsements for Mr. Postma
ENDORSEMENTS FOR MR. POSTMA “ Bob’s financial management experience, business acumen and strategic planning knowledge [is] of great value... I believe he would be a valuable public company “ director. Charles Theuer, President & CEO of TRACON “ Pharmaceuticals I’ve always admired Bob’s analytical an
Slide 46: Jaime Vieser
JAIME VIESER Jaime Vieser has over 30 years of investment management and banking experience, which includes his involvement in numerous successful corporate restructurings and providing both start-up capital and guidance for emerging technology and biotech companies. Since 2017, Mr. Vieser has been
Slide 47: Endorsements for Mr. Vieser
ENDORSEMENTS FOR MR. VIESER “ [Jaime] has helped advise us on capital raise/financing issues and helped attract world class talent to BioTheryX. He would make a wonderful addition to any board. “ Larry Zaslow, President of BioTheryX “ Jaime was an important partner in helping us launch Concord Healt
Slide 48: Holger Weis
HOLGER WEIS Holger Weis is a proven founder and senior executive with two decades of experience holding c- level positions at life science companies and is also a co-author of several scientific papers. Mr. Weis is the Co-Founder, Chief Financial Officer and Director of biotech start-up company Phen
Slide 49: Endorsements for Mr. Weis
ENDORSEMENTS FOR MR. WEIS “ Holger and I have worked together for the last several years in a biotech company where his increasing responsibilities for operations and clinical trials led to his eventual leadership of the company. His creative vision for additional applications created new clinical o
Slide 50: A Vision for Fixing Ziopharm
FIX ZIOPHARM A VISION FOR FIXING ZIOPHARM
Slide 51: Our Slate Has an Actionable, Shareholder-Friendly Vision
OUR SLATE HAS AN ACTIONABLE, SHAREHOLDER-FRIENDLY VISION We believe shareholders can count on our director candidates – Messrs. Postma, Vieser, and Weis – to improve Ziopharm’s abysmal corporate governance and focus on the right initiatives, including: Fixing Lingering Material Ensuring Transparent
Slide 52: How We Add Value: Supporting a Strategic Review
HOW WE ADD VALUE: SUPPORTING A STRATEGIC REVIEW If elected to the Board, our director candidates plan to suggest that a Special Committee be formed to conduct a strategic review of Ziopharm. • A Special Committee, which would ideally include incumbent director representation, should perform a top-to
Slide 53: How We Add Value: Helping Establish a Prudent Capital Allocation Approach
HOW WE ADD VALUE: HELPING ESTABLISH A PRUDENT CAPITAL ALLOCATION APPROACH Given that each of our director candidates has capital allocation expertise, we believe they can help the Board slow Ziopharm’s cash burn and prioritize investments in a logical manner. Streamlining Research & Development Redu
Slide 54: How We Add Value: Helping Align Executive Compensation to Incentives
HOW WE ADD VALUE: HELPING ALIGN EXECUTIVE COMPENSATION TO INCENTIVES We want to help the Board enhance the currently opaque and vague reward system for executives. The Board’s Nebulous Incentive Targets Our Recommended “Best Practice” Incentive Targets x “key research and development achievements, i
Slide 55: How We Add Value: Underpinning an Improved Audit Committee
HOW WE ADD VALUE: UNDERPINNING AN IMPROVED AUDIT COMMITTEE Considering Ziopharm’s financial control issue, our slate is focused on helping strengthen the Audit Committee. • If successful, our director candidates will recommend that the Board immediately appoint an entirely new Audit Committee. • For
Slide 56: Our Commitment to Shareholders
OUR COMMITMENT TO SHAREHOLDERS The WaterMill slate is committed to restoring confidence and faith in Ziopharm after five dismal years. 1. We will always be aligned with you. Based on our strong economic alignment with investors, we pledge to always champion the best interests of shareholders in the
Slide 57: Thank You
FIX ZIOPHARM THANK YOU