Exhibit 99.1
September 2009
Dear Fellow Ore Shareholders,
I acknowledge that being an owner of Ore shares over the past several years has
not been profitable. The company's poor stock performance has no doubt left many
of you with meaningful losses on your Ore investment. You may also have
developed a more general lack of faith in the ability of the company to create
value over the long term. Ore has likely not lived up to the potential that many
of you hoped for at the time you became a shareholder.
I was appointed Ore CEO in March 2009. I fully appreciate these difficult facts
and the need for Ore to address them. In the few months I've been CEO, we've
completed an extraordinary effort to cut unnecessary expenses and place Ore on
firmer financial ground. We have made sweeping changes to the management team,
such that as of today only one employee of Ore has been with the company for
more than one year. We have shrunk the size of the Board of Directors to five
members, including one distinguished new Director who just recently joined. Most
importantly, we are in the process of implementing a new business strategy that
we believe makes the best use of Ore's strengths as well as capitalizes upon an
emerging opportunity in the marketplace.
Ore's new strategy is to be a pharmaceutical asset management company, and no
longer a traditional biopharmaceutical operating company. We intend to acquire
or in-license drug programs from research-focused companies. We intend to
increase the value of drug candidates by conducting targeted and outsourced
development studies, and then monetize those assets. To pay for those
activities, we plan to use subsidiary financing structures that we believe
better align the risks and rewards of drug development with investor interests
as well as attenuate Ore shareholder dilution. We intend for Ore to earn
management advisory and other fees for our operational contributions to these
programs, as well as to retain a significant economic interest in their enhanced
value. We already have a portfolio of four clinical stage assets acquired from
large pharmaceutical companies, that we believe are attractive development
opportunities. We are also engaged in continual efforts to identify additional
programs and are working to attract subsidiary investors to finance them.
However, in order to advance this new Ore strategy we need your support. In
addition to several routine matters, the enclosed proxy statement/prospectus
lays out two proposals that we believe are critical to the future success of the
company, and we are asking for your vote "FOR" each of them.
The first proposal is to reorganize the current Ore Pharmaceuticals into a new
company, Ore Pharmaceutical Holdings. One of our largest assets is a net
operating tax loss carryforward (or "NOL") of approximately $324 million. This
asset may permit us (subject to tax laws and certain circumstances) to
significantly reduce taxes due on Ore income. This has significant potential
value. However, in order to maximize our ability to protect that value, we need
to reorganize Ore into a company that will have restrictions on ownership that
we believe are necessary to prevent the inadvertent loss of our NOLs. You will
find significantly more information in the enclosed document, which we urge you
to read prior to voting on this proposal.
The second proposal is to approve a new Omnibus Equity Incentive Plan for the
Company. Our current plan is 10 years old and may soon run out of shares to
grant to employees, board members and others. As you will appreciate, in order
to attract the high quality employees, directors, consultants and others we need
to support and drive this turnaround of Ore, as well as to better align
management's economic interests with yours, we need to be able to motivate them
with equity in the form of incentive stock options. This is particularly true at
a time when we are trying to control our cash expenses, including salaries. We
believe that your support of this new plan will enhance our ability to continue
to get the people we need to be able to execute our new strategy.
Again, we urge you to vote "FOR" both of these proposals.
I took this role at Ore because I believe that the company has valuable assets
and that we have a strategy that will reveal and grow this value over time. I
and my team are committed to making this strategy work and creating value for
you, the owners of Ore. Your approval of the proposals in the enclosed proxy is
a critical component of our ability to execute on that strategy. I look forward
to updating you periodically on our progress, and I urge you to contact me or
any other member of our executive team if you have any questions or desire any
more information about our activities. I thank you for your continued support of
Ore.
Sincerely,
/s/ Mark J. Gabrielson
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Mark J. Gabrielson
President & CEO
Where to Find Additional Information
On September 2, 2009, the Company filed a registration statement with the SEC on
Form S-4 that includes the definitive proxy statement/prospectus and other
relevant materials regarding the proposed reorganization. Stockholders are urged
to read the definitive proxy statement/prospectus filed with the SEC on
September 2, 2009, and any other relevant materials filed with the SEC when they
become available because they contain, or will contain, important information
about the Company and the proposed reorganization. The definitive proxy
statement/prospectus seeking stockholder approval of the reorganization is
enclosed with this letter. Stockholders may obtain a free copy of the definitive
proxy statement/prospectus filed on September 2, 2009 with the SEC, as well as
other documents filed by the Company with the SEC at the SEC's web site at
www.sec.gov or through the Company's web site as www.orepharma.com. The
definitive proxy statement/prospectus and the Company's other SEC filings also
may be obtained for free from the Company by directing a request to: Ore
Pharmaceuticals Inc., 610 Professional Drive, Suite 101, Gaithersburg, Maryland
20879, Attention: Corporate Secretary, telephone: 240-361-4400. Stockholders are
urged to read the definitive proxy statement/prospectus and other relevant
materials relating to the reorganization when they become available before
voting or making any investment decision with respect to the reorganization.
The Company, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from the Company's stockholders in connection with the transaction. Information
regarding such persons and a description of their interests in the transaction
is contained in the proxy statement/prospectus and the Company's Annual Reports
on Form 10-K and Form 10-K/A filed with the SEC. Additional information
regarding the interests of those persons may be obtained by reading the
definitive proxy statement/prospectus.
Safe Harbor Statement
This letter contains "forward-looking statements," as such term is used in the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
include our ability to identify strategies for making our businesses successful
and the impact of such strategies on our business and financial performance and
on shareholder value. Forward-looking statements typically include the words
"expect," "anticipate," "believe," "estimate," "intend," "may," "will," and
similar expressions as they relate to Ore Pharmaceuticals or its management.
Forward-looking statements are based on our current expectations and
assumptions, which are subject to risks and uncertainties. They are not
guarantees of our future performance or results. Our actual performance and
results could differ materially from what we project in forward-looking
statements for a variety of reasons and circumstances, including particularly
risks and uncertainties that may affect the Company's operations, financial
condition and financial results and that are discussed in detail in our Annual
Report on Form 10-K and our other subsequent filings with the Securities and
Exchange Commission. They include, but are not limited to: whether the compounds
we develop will be commercially viable; whether we will be able to begin to
generate sufficient new revenue from licensing or other transactions early
enough to support our operations and continuing compound development; whether
there will be valid claims for indemnification from the buyers of our Genomics
Assets; whether there will be claims from the landlords of the leased properties
we have assigned, the buyer of our Preclinical Division or the assignee of our
Cambridge facility lease, that we would be required to pay as guarantors of such
leases; whether we will be able to collect amounts due under the terms of
promissory notes from the buyers of our Genomics Assets and molecular diagnostic
business; whether we will be able to manage our existing cash adequately and
whether we will have access to financing on sufficiently favorable terms to
maintain our businesses and effect our strategies; whether we will be able to
maintain our NASDAQ listing; whether we will be able to attract and retain
qualified personnel for our business; and potential negative effects on our
operations and financial results from workforce reductions and the
transformation of our business. Ore Pharmaceuticals Inc. undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.