The Proxy Battle Between Broadfin Capital and Cardica (CRDC) Is Heating Up Just As New CEO Is Unveiled

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Cardica today announced the appointment of Julian Nikolchev as CEO, President and member of the Board of Directors, effective October 15. Nikolchev is replacing Bernard A. Hausen, M.D., Ph.D., and co-founder of Cardica, who stepped down in August. In connection to this appointment, the company has also pushed back the annual shareholder meeting, with it now set to take place on January 29, 2016. According to Gary Petersmeyer, Cardica’s Chairman of the Board, Nikolchev is being allowed time to settle in and assess the company’s budget and operation plan. The board is also using this opportunity to “finalize its proposed slate of directors to represent the interests of all of the stockholders of Cardica,” a clear sign it intends to take Broadfin head-on in this proxy battle.

Hedge fund sentiment towards Cardica, Inc. (NASDAQ:CRDC) slumped during the second quarter, with the number of funds holding long positions at the end of June having decreased to six from seven during the second quarter. Their combined holdings account for 29.4% of the company’s common stock and carried a value in excess of $15 million, down by 20% during the quarter. Phil Frohlich as well as Stephen Dubois are also betting big on Cardica, holding 3.26 million shares and 8.37 million shares respectively, having made no changes to their positions during the April-to-June period. Hal Mintz, the manager of Sabby Capital, increased his bet by 8%, accumulating 4.13 million shares according to the fund’s latest 13F filing.

Cardica’s stock has been battered so far this year, having lost 66% of its value and currently trades at $0.23 per share. For the second quarter of 2015, the company reported revenues of $700,000, down by 31% year-over-year, and a loss per share of $0.40 compared to the loss of $0.08 per share reported for the second quarter of 2014. Wall Street does not expect radical changes in the near future, estimating revenues of $700,000 and a loss of $0.05 per share for the third quarter. Cardica is set to release its next quarterly financial report on November 2.

Disclosure: None

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