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May 19, 2014 /PRNewswire/ -- Platinum Management (NY) LLC and certain affiliates, collectively the largest stockholder of Echo Therapeutics, Inc. (NasdaqCM: ECTE) ("Echo" or "The Company"), owning approximately 20% of the outstanding common stock, announced today that it has filed and mailed definitive proxy materials, including a letter to fellow stockholders of Echo, urging them to vote the GOLD proxy card or GOLD voting instruction form in favor of Platinum's highly qualified nominee, Shepard Goldberg, at the Company's upcoming Annual Meeting of stockholders scheduled for
June 19th, 2014.
The full text of the letter follows:
AN ERA OF UNDERPERFORMANCE AND FAILURE AT ECHO THERAPEUTICS MUST END!VOTE FOR CHANGE. VOTE PLATINUM'S GOLD PROXY CARD TODAY!May 19, 2014
Dear Fellow Stockholders:
Platinum Management (NY) LLC, together with its affiliates ("Platinum"), are the beneficial owners of 2,383,876 shares of common stock of Echo Therapeutics (the "Company" or "Echo"), representing approximately 20% of the shares outstanding, making us the Company's largest stockholder. Platinum is an investment advisor with more than
$1.3 billion in assets under management. We are a long-term and dedicated stockholder of Echo, having made our first investment in the Company in 2007. Since that time we have invested more than
$18 million in Echo. We are committed to maximizing the long-term value of Echo stock as our interests are aligned with ALL stockholders who want improvement at the Company.
DO NOT BE MISLED!IT WAS NOT OUR DESIRE TO WAGE A PROXY CONTEST.
Make no mistake about it—conducting this solicitation was not our preference. It is an act of last resort. We strongly believe that once you consider the historical performance and recent background of our engagement with the Board, you will agree that the best way to protect future stockholder value is to send a strong message to Echo and replace
Robert F. Doman, who we believe has been an ineffective director, with our well qualified candidate, Mr. Shepard M. Goldberg.
After years of dismal performance and terminal inaction on the part of the Board unless prompted by Platinum, we were left with no choice but to make our concerns public. At the end of
August 2013, we proposed to the Company a number of meaningful actions we believed were needed to be taken to unlock value for stockholders, including:
Entering into a partnership for the development and manufacture of the Company's CGM product in mainland China; and
Engaging a consulting firm to review the Company's product and business development positioning.
In connection with the Company taking these positive steps, we were willing to invest an additional $10 million in the Company subject to two reasonable conditions—(1) that two legacy members of the Board of Directors be removed and replaced with two new directors and (2) assurance from the Company it would not enter into any further financings until the partnership with the
China partner was finalized. The Company refused.
We remained steadfast in our belief that there was a bright future for the Company under the right circumstances. Through great patience on our part, we were able to reach an agreement with the Company in
December 2013, despite the Company fighting us at every turn, effectively wasting your money. In the end, we delivered the Company a desperately needed Chinese partner and we agreed to inject an additional
$5 million into the Company. Given our belief in the potential of Echo, we even agreed to invest at a premium to the Company's historical stock price, despite an unexplained run-up in the stock immediately preceding our investment.
Platinum has been instrumental in keeping this Company afloat despite the Board's inexplicable refusal to add Dr. Michael Goldberg, M.D., the architect of these lifelines, to the Board in December 2013.
The Company, perhaps not recognizing we were making an investment and not giving a gift, repaid our good faith by breaching a number of its material obligations under our agreement. First, the Company failed to complete its evaluation of our qualified nominee who was to be appointed to the Board under to the agreement, Mr. Shepard M. Goldberg, in the time frame clearly mandated by the agreement. Then, in the face of a lawsuit that we were forced to initiate to enforce our rights under our agreement, we finally were told that Mr. Shepard Goldberg, under what appear to be secret standards of nominee evaluation, was, in the Board's view, not qualified to serve on the Board despite being highly qualified. Faced with that legal action, the Board finally agreed to appoint Dr. Goldberg to the Board instead of Mr. Goldberg, even though they could have added Dr. Goldberg to the Board in
Following these blunders, a full month later it was revealed that, incredibly, the Company was no closer to finding a permanent CEO despite previously promising a search had begun all the way back in August of 2013. Instead, stockholders were informed the Board was ready to
reinitiate (!) the search for a permanent CEO. Stockholders were never informed that the search for a permanent CEO had been suspended. Needless to say, we nominated Mr. Goldberg for election to the Board shortly after the Company's disturbing announcement.
As the Company's single largest stockholder, we can no longer sit idly by while all Echo stockholders continue to suffer. Time and again we have attempted to guide this Board in the direction necessary to unlock stockholder value. Time and again this insulated Board and failed management have refused our assistance, to the detriment of all stockholders. As a result, not only are stockholders considerably worse off, there is no apparent light at the end of the tunnel.
Enough is enough.
We are undertaking this proxy solicitation because
We question the direction of the Company under the leadership of this Board;
We believe this Board had made a mockery of corporate governance; and
We do not believe the interests of this Board are aligned with the best interests of stockholders.
WE QUESTION THE DIRECTION OF THE COMPANY UNDER THE LEADERSHIP OF THIS BOARD
As stockholders are all too aware, the Company's share price has declined over the last five, three, and one year periods and has massively underperformed the NASDAQ Market Index over the same period.