SCHEDULE 14A INFORMATION
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FOUR SIMPLE REASONS TO VOTE THE WHITE PROXY:
1. Cortech's science portfolio has real potential and value.
2. That value belongs to you, the Cortech shareholders.
3. We have a viable and prudent plan to deliver that value.
4. We are convinced that Koether can't and won't deliver that value.
Dear Fellow Stockholder: August 21,1998
The Annual Meeting of Cortech, Inc. is scheduled for September 4, 1998, only a
short time away. At this meeting, you will decide the future direction of your
Company. You should know that Institutional Shareholder Services, the country's
leading provider of proxy analysis and voting advice to major financial
institutions, has just recommended that its clients execute their votes for
management's nominees on the WHITE proxy card and discard the dissident's GREEN
proxy card. You may have recently seen a letter from Paul Koether again
dismissing the value of Cortech's science assets. Let's set the record straight:
I. Cortech's science portfolio has real potential and value:
Over $100 million has been invested in the research and development of the
Company's science, patents, compounds and technology. Cortech has two compounds
already in clinical development (CE-1037 and Bradycor(TM)), another one which
could be rapidly advanced into the clinic (CP-0597), and an additional number of
other compounds in earlier stages of development. We also have a separate,
unique proprietary technology which we believe could be of use to numerous
pharmaceutical companies in their quest to synthesize protease inhibitors to
treat a host of different disorders. Our compounds have shown preclinical and
clinical promise in such devastating injuries as stroke and traumatic brain
injury, respectively. We believe that these compounds and the science behind
them, if properly handled, offer substantial potential value to Cortech's
investors.
And Koether doesn't see it:
He gave our science an "F", noting that it has "failed test, after test, after
test." He has said it was obvious long ago that the technology was a losing
cause. He has indicated that if he were in charge, employees not engaged in
"caretaking" would be scrutinized for cuts.
II. The value in Cortech's technology belongs to you, the shareholders:
You invested your funds in a high-risk, potentially high-return biotechnology
start-up company with no commercial products, but with promising ideas,
potential compounds, promising technologies and first rate scientists. Along the
way, three major pharmaceutical companies put up their money in support of our
ideas and plans. We invested our money with you. Through our investment in
Cortech, Mr. Finkelstein, one of my fellow directors, and I have each incurred
paper losses in excess of $1 million. Am I happy? Of course not. Am I unhappy
that we haven't produced a commercial product yet? Of course I am. But I knew
the nature of my investment and was prepared for the possible outcomes. Do I
think that Cortech is worth more than its cash on hand? You bet I do. The money
spent on research and development thus far has created value that has yet to be
realized - value that we believe can be unlocked and delivered without unduly
diminishing the Company's current cash resources.
And Koether doesn't see it:
Koether and his slate of nominees do not have any relevant scientific,
biotechnology or pharmaceutical industry experience, nor, as best we can tell,
have they made any attempt to gain an understanding of our pre-clinical or
clinical accomplishments in advancing our technology portfolio. If Koether had
bothered to take even a cursory look before now he would have saved himself the
embarrassment of making the false statement that "every test in the past has
failed." Only last week, Koether belatedly tried to establish what he believes
to be his slate's "scientific expertise" by drawing on Pure World's experience.
Vitamins, dietary supplements and herbal remedies are fine - but unregulated
supplements are NOT the same as protease inhibitors or novel anti-inflammatories
for brain injury that require extensive testing and FDA approval. With a
pre-judged belief that our science has "failed", no understanding of our
science, patents, compounds and technology, a complete lack of perspective
regarding its potential and without the requisite experience, how, we ask, could
Koether and his Board possibly do anything "creative" to deliver value from
Cortech's technology?
III. We have a viable and prudent plan to deliver value:
Practically all of our restructuring and downsizing costs are behind us. We have
painfully, but prudently, reduced the Company from 200 full time employees to
less than 10. We have retained a core of people with the expertise to manage,
maintain, pursue and finalize arrangements with potential partners for our
technology portfolio. With approximately $12 million in the bank, we plan to
aggressively pursue currently available opportunities and, as detailed in our
last letter of August 17, are encouraged by recent progress in this regard. We
will be opportunistic with regard to various potential business combinations and
partnerships that could enhance Cortech's long term potential. Including
interest income, it is our goal to hold cash depletion to an average of
approximately $1 to $1.5 million per year over the next two years ($.05 to $.08
per share per year). If we conclude, however, at any time during this period,
that Cortech's compounds and technology do not appear to have sufficient
promise, we intend to pursue either a strategic transaction or other means by
which to put the Company's remaining funds (which should approximate $9 to $10
million or about $.52 per share) back in the hands of the shareholders.
IV. Koether can't and won't deliver comparable value:
In his latest letter (August 17), he finally lets us in on his plan to
"Aggressively look for merger partners and seek creative ways to capitalize on
Cortech's technology without further diminishing its cash resources." Let's
carefully analyze his plan.
1. Koether will "Aggressively look for merger
partners"; Koether says that his principal standards for seeking a merger
candidate would be "balance sheet quality, positive earnings and good growth
potential." Glaring in its omission is a merger candidate that might eventually
capitalize on Cortech's large patent and technology portfolio. He doesn't
include this, we believe, because he and his associates have no understanding of
the potential value of that technology. His statement reinforces our belief that
he is only interested in our cash, shell and tax loss carry-forwards.
2. Koether will do this "Without further diminishing its [Cortech's] cash
resources"; In our view, Koether could only accomplish this by shutting down
operations, thereby losing much of the ability to realize value from the
technology.
3. Koether will find "Creative ways to capitalize on Cortech's
technology"; Without an understanding of that technology portfolio, its
applications or the business environment in which we operate, and without
spending the necessary funds to market and maintain it, I believe he will need
"divine intervention" as well as "creativity" in order to be successful in this
regard.
KOETHER'S PLAN IS NOT CREDIBLE, IT'S INCREDIBLE.
A Note On Koether's Tactics:
Koether has accused me of substituting "personal attacks for honest dialogue".
Again, let us set the record straight:
On the subject of honest dialogue, on two separate occasions in late May, I
called Koether and invited him to meet me and another Cortech Board member. This
was in an attempt to avoid a costly and unnecessary proxy fight and to offer
Koether representation on the Board, even though such attempts were delaying
preparations for our Annual Meeting. He refused to meet with me unless I first
ceded control of the Company to him. Furthermore, in a hostile reply to one of
my letters, he threatened, if he won the proxy fight, to personally sue the
Cortech Board. Why, we ask, would someone who purports to represent shareholder
democracy demand immediate control and resort to threatening personal lawsuits
in order to gain that control? Clearly, democracy is good enough for other
shareholders, but only control will satisfy Koether.
IT ALL COMES DOWN TO ONE QUESTION:
WHO DO YOU WANT TO LEAD YOUR COMPANY?
A group of experienced scientists and businessmen with the expertise and history
necessary to create and take advantage of opportunities for our stockholders?
Or
A slate of nominees led by Koether and his business associates, one of whom is
the "CFO" of a diverse business (which includes a turkey farm, a John Deere(TM)
dealership, a grain operation, and a mobile home park) and, none of whom, we
believe, has the necessary background in science, biotechnology or the
pharmaceutical industry?
WHO IS BEST ABLE TO DELIVER YOU VALUE FROM THE SCIENTIFIC PORTFOLIO?
WHO HAS THE CAPABILITY?
WHO DO YOU TRUST?
As Koether has quoted, "those who cannot remember the past are condemned to
repeat it." By now you should know of Koether's documented past as a greenmailer
and hostile raider. Remember that past, and don't be fooled. As Yogi Berra said
"it's deja vu all over again."
SUPPORT THE MANAGEMENT SLATE.
Even if you have previously returned a green, Koether proxy card, you have every
right to change your vote. I urge you to sign, date and return the enclosed
WHITE proxy card today.
Thank you for your continuing support.
Sincerely,
Bert Fingerhut
Chairman of the Board and
Acting Chief Executive Officer
________________________________________________________________________________
IMPORTANT NOTE:
________________________________________________________________________________
If you have previously returned the green Koether proxy (even voting against his
nominees), you must return the white proxy to support management in this
contest.
Please sign, date and return your WHITE PROXY CARD today in the enclosed,
postage paid envelope.
If you have any questions or need assistance in voting your shares, please
contact the Company's proxy solicitor, D.F. King & Co., Inc. at 1-800-848-3051.
