Kevin Kotler’s Broadfin Capital doesn’t want to hear any more excuses from the Board of Cardica, Inc. (NASDAQ:CRDC) for under-performance, it want change and that too immediately. In its latest filing with the Securities and Exchange Commission (SEC), Broadfin Capital has urged all shareholders of the company to support the fund for the election of its three nominees to Cardica, Inc. (NASDAQ:CRDC)’s Board at the annual meeting of stockholders scheduled to be held on December 11, 2014. Broadfin Capital currently owns over 8.8 million shares or 9.98% of all common stock of the company as an activist investor.
Broadfin Capital initiated a stake in Cardica, Inc. (NASDAQ:CRDC) during the first quarter of 2013 by purchasing over 4.4 million shares. Initially the stake was acquired as a passive investor, but on July 24 this year it disclosed in its filing with the SEC that it has turned activist on the stock and has started engaging with the company’s Board regarding the composition of the Board and the Board’s ability to enhance stockholder value. On September 12, we reported that Broadfin sent a letter to the Board of Directors of Cardica, Inc. (NASDAQ:CRDC), in which it urged the Board to involve major shareholders in the process of decision making to solve strategic problems and to elect its nominees on the Board.
During last year, Broadfin engaged in several discussions with Cardica, Inc. (NASDAQ:CRDC)’s Board and key officers regarding composition of the Board, executive compensation, increasing shareholder value. However, when the talks didn’t lead to any meaningful resolution, Broadfin filed a preliminary proxy statement in connection with the Annual Meeting. In its letter, Broadfin has sought support of other shareholders for –
“1. To elect Broadfin’s three (3) director nominees, Gregory D. Casciaro, R. Michael Kleine and Samuel E. Navarro, (each a “Nominee” and, collectively, the “Nominees”), to the Board to serve until the 2015 annual meeting of stockholders and until their respective successors are duly elected and qualified;
2. To approve, on an advisory basis, the compensation of Cardica’s named executive officers;
3. To ratify the selection by the Audit Committee of the Board of BDO USA, LLP as the independent registered public accounting firm of Cardica for its fiscal year ending June 30, 2015;
4. To approve the amendment and restatement of Cardica’s 2005 Equity Incentive Plan (the “2005 Plan”) to increase the aggregate number of shares of Common Stock authorized for issuance under the 2005 Plan by ________ shares, and to increase the number of shares of Common Stock authorized for issuance pursuant to the exercise of incentive stock option awards; and
5. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.”
Cardica, Inc. (NASDAQ:CRDC) is a $87 million company involved in development of an endoscopic microcutter product line intended for use by thoracic, bariatric, colorectal and general surgeons. Among the hedge funds we track, Nathan Fischel’s Dafna Capital Management and Stephen Dubois’ Camber Capital Management are two other large shareholders of Cardica, Inc. (NASDAQ:CRDC). As of June 30, 2014, Dafna Capital Management owns over 1.4 million shares of the company and Camber Capital Management owns over 8.3 million shares of the company.
On May 5, Robert Y Newell IV, a director of the company purchased 10,000 shares and Jeffrey Purvin, another director acquired 5,000 shares of Cardica. Both Newell and Purvin purchased the shares at an average price of $0.95 per share and including for this purchase own over 93,000 shares and 10,000 shares, respectively.