Concerned Shareholder Raises Further Concerns With IMV’s Outlook

• Concerned Shareholder continues to receive supportive communications from other dissatisfied IMV shareholders
  
  
• IMV’s continuous rewarding of executives is unjustified given its looming cash crunch
• IMV’s disclosure regarding amended Stock Option Plan is selectively incomplete
• MARK “WITHHOLD” ON ANDREW SHELDON AND JULIA GREGORY

HALIFAX, Nova Scotia, June 11, 2021 (GLOBE NEWSWIRE) -- Further to the press releases issued June 1 and June 4, 2021, the concerned shareholder (the “Concerned Shareholder”) of IMV Inc. (“IMV”) issues this press release to provide a further update and raise additional concerns regarding IMV.

Support for “withhold” vote continues to grow

Since the June 4, 2021 press release, the Concerned Shareholder continues to receive communications from other dissatisfied IMV shareholders who have already cast or have indicated that they intend to cast “withhold” votes for Andrew Sheldon and Julia P. Gregory at the upcoming IMV AGM scheduled for June 18, 2021. A number of shareholders based in North America, Europe and the Middle East have contacted the Concerned Shareholder to express their support for the Concerned Shareholder’s call for change.

IMV Stock Option Plan disclosure is selectively incomplete

On June 7, 2021, IMV issued a press release announcing that (i) both ISS and Glass Lewis had recommended that shareholders vote for the re-election of all of IMV’s proposed nominees and (ii) IMV would be proposing a further amendment to its Employee Stock Option Plan (the “Plan”) to restrict the maximum number of the company’s shares that may be subject to awards under the Plan to 8% of IMV’s issued and outstanding shares.

What IMV declined to mention is that ISS recommended against approving IMV’s Plan for three reasons: (i) the Plan is exceedingly expensive; (ii) the Plan contains a problematic change-in-control provision; and (iii) the CEO’s compensation package does not include performance-based equity.

ISS’ conclusions in this regard align with those of the Concerned Shareholder: IMV has consistently increased cash compensation for the CEO without him having meaningful skin in the game in the form of performance-based compensation components. This is a clear divergence of management incentives and shareholder interests.

The Concerned Shareholder calls for IMV to freeze CEO and CFO cash compensation at their 2020 levels and withhold any bonus compensation and future salary increases until IMV’s share price justifies a reward for senior management.

Lack of proper oversight and cronyism

The concerns raised by ISS, including the lack of a long-term performance incentive for the CEO and problematic change-in-control provisions, demonstrate the lack of proper independent oversight within IMV.

Indeed, Mr. Sheldon and Mr. Ors have been working together for nearly two decades. Mr. Ors reported directly to Mr. Sheldon at Medicago, a company of which Mr. Sheldon was CEO, beginning in 2001. Mr. Ors left Medicago to join IMV in 2015, and shortly thereafter recruited Mr. Sheldon to serve as non-executive chairman of IMV in 2016. Similarly, IMV’s CFO, Pierre Labbé, was employed with Medicago as CFO prior to joining IMV.

The Concerned Shareholder believes that the directors of IMV, in particular the chair, must be independent from and objective in regards to management - not someone who has been working closely with this same management team for 20 years.

IMV will need cash to fund progressing clinical trials

Based on IMV’s Interim Financial Statements dated March 31, 2021, IMV has cash and cash equivalents of approximately $30.45 million, down 16% from $36.27 million as at December 31, 2020. At that burn rate, IMV will be out of cash to fund ongoing operations by spring 2022.

Worse still, shareholders have every reason to expect IMV’s cash needs to significantly increase in the second half of 2021 and into 2022. According to IMV’s clinical pipeline disclosure, IMV’s Maveropepimut-S/CPA treatment for diffuse large B-cell lymphoma is concluding its Phase 2 clinical trial and set to begin a Phase 2b clinical trial soon. IMV’s treatments for ovarian cancer and the basket trial for bladder cancer, liver cancer and microsatellite instability high (MSI-H) are progressing through Phase 2 clinical trials toward Phase 2b clinical trials. And IMV’s treatment for breast cancer is reaching the end of its Phase 1 clinical trial and headed for a Phase 2 clinical trial.

Phase 3 trials tend to be the most expensive, involving hundreds of patients and lasting longer than other types of trials. One study published in the British Medical Journal based on 101 new drugs approved between 2015 to 2017 found that the median cost of a clinical trial is approximately US $19 million.

In short, IMV has a number of exciting treatment candidates reaching a stage where they will require significant additional expenditures on clinical trials, but IMV does not have sufficient cash to finance those trials. IMV earned $69,000 in interest income last quarter, and operated at a loss of $6.957 million for the same period. It is clear that the only way IMV can advance its current projects is with a significant additional injection of capital.

IMV’s poor performance means additional capital raising will be hugely dilutive

Given that IMV will have to raise additional capital, IMV’s collapsed share price means that any equity fundraising will be massively dilutive to existing shareholders.

While IMV speeds towards a potential highly dilutive financing, cash compensation for management continues to grow steadily, as detailed in the press releases issued by the Concerned Shareholder on June 1 and June 4, 2021. Clearly neither the company’s trajectory nor its cash burn rate justify increasing cash compensation and the award of cash bonuses for its executives. This is yet another example of the misalignment between IMV’s management incentives and shareholder interests.

The Concerned Shareholder urges shareholders to vote “withhold” for Andrew Sheldon and Julia Gregory.

Additional Information:

The Concerned Shareholder is Dr. Michael Gross.

The information contained in this press release does not, and is not meant to, constitute a solicitation of a proxy within the meaning of applicable securities laws.

Notwithstanding the foregoing, the Concerned Shareholder is voluntarily providing the disclosure required under Section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations applicable to public broadcast solicitations.

Any solicitation made by the Concerned Shareholder will be made by them and not by or on behalf of management of IMV. All costs incurred for any such solicitation will be borne by the Concerned Shareholder. Proxies may be solicited by the Concerned Shareholder pursuant to an information circular sent to shareholders after which solicitations may be made by or on behalf of the Concerned Shareholder by mail, telephone, fax, email or other electronic means as well as by newspaper or other media advertising, and in person by directors, officers and employees of the Concerned Shareholder, who may be specifically remunerated therefor. The Concerned Shareholder may also solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian securities laws, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian laws. The Concerned Shareholder may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on its behalf, which agents would receive customary fees for such services. If Concerned Shareholder commence any solicitation of proxies, proxies may be revoked by an instrument in writing by a shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law. None of the Concerned Shareholders nor, to their knowledge, any of their associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted upon at the Meeting. IMV’s head office is located at 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia B3B 2C4.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. All statements contained in this filing that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. These statements are based on current expectations of the Concerned Shareholders and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not prove to be accurate. The Concerned Shareholders do not assume any obligation to update any forward-looking statements contained in this press release, except as required by applicable law.

Dr. Michael Gross
[email protected]
(902) 401-6808