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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Under Rule 14a-12
NORTHFIELD LABORATORIES INC.
(Name of Registrant as Specified in its Charter)
C. ROBERT COATES
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee
paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party: C. Robert Coates
4) Date Filed: August 21, 2002
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INDEPENDENT SHAREOWNER REPRESENTATION ON NORTHFIELD LABS' BOARD OF DIRECTORS
The Robert Coates Group
August 21, 2002
BACKGROUND INFORMATION ON C. ROBERT COATES
- Mr. Robert Coates owns 644,200 shares in Northfield Laboratories,
Inc. (Northfield), bought in the open market from 05/27/98 through
08/17/01
- Mr. Coates started buying Northfield shares at $13.94 per share and
has, at the high end, paid $21.00 for some of his shares
- The average price he paid for his shares is $14.95 per share
- Coates and Mr. Bert Williams, an associate, are running for election
to Northfield's board
- All seven seats - expanded from six seats -- are up for election
during the company's September 13, 2002 annual shareholder meeting
- Mr. Coates is not seeking control of the board
AREAS OF CONCERN - BUSINESS RESULTS
- Northfield's stock price has fallen 91% since March, 2000
- Northfield lost $10.7 million in fiscal year 2002 and has lost $98.2
million since its inception in 1985
- The company has $18.4 million of cash left - estimated to stretch
for another 18 months of operation
- It could potentially burn through all of its cash while trying to
re-file its application with the FDA - new trials and/or improved
manufacturing processes could consume significant time and cash
- Northfield will need approximately $45 million to $50 million to
fund a manufacturing facility to support the commercialization of
PolyHeme
- In August of 2001, Northfield filed a deficient application for its
blood substitute PolyHeme with the FDA, prompting the FDA to issue a
Refuse to File (RTF) letter to Northfield (November 2001)
- Without a partner Northfield will not have enough cash to bring
PolyHeme to market nor have the talent to manage the FDA approval
process or the commercialization of the product
- In 1997, Northfield reportedly refused a buyout offer from a major
pharmaceutical company, an offer rumored to exceed $30 per share; no
shareholder input was requested
- Northfield has lost key executives over the last five years,
including (but not limited to) a VP of Operations, a Manager of
Manufacturing, a VP of Marketing and a Manager of Quality Assurance
- Northfield appears to have no chief scientist or VP of Research on
staff (since 1995)
AREAS OF CONCERN - CORPORATE GOVERNANCE
- The Northfield board, by the standards of the Council for
Institutional Investors, would be composed of a majority of non-
independent directors (Messrs. Gould, Moss, Ness and Savner)
- Northfield "removed" Mr. DeWoskin from the CEO position only to
immediately rehire him as a consultant at a much higher salary (a
14.9% increase!)
- The company refused to disclose information about the Phase III
clinical trials results and RTF letter from the FDA to its
shareowners
- Northfield's CEO is also the Chairman of the Board
- Two nominees draw significant consulting income from Northfield (Dr.
Ness and Dr. Moss; $80,000 and $60,000 in 2002 respectively) - the
Northfield proxy outlines that the company expects that both
contracts will be extended in fiscal year 2003
- One nominee, Mr. David Savner, who until April 1998 (approximately
four years ago), had been Northfield's chief outside counsel for
more than a decade
- Some board members up for reelection have attended less than 75% of
the board and committee meetings over the last four years (Mr.
Savner in 2002 - 50%, and Mr. Chelberg in 2001 and 1999 - 67% and
60% respectively)
- The compensation committee approved over $400,000 in bonuses for
filing a deficient FDA application for PolyHeme
- The compensation committee, until the year 2000, included an insider
of the company -- the CEO (Mr. DeWoskin)
- The audit committee, until 1999, included an insider of the company
-- the President (Mr. Gould)
- Two nominees have affiliations to PepsiAmericas, Inc., which owns
10.5% of the outstanding shares but would control 28.6% of the board
of directors
- The nominating committee includes a non-independent director, Mr.
Savner, and refused to discuss Mr. Coates' credentials or meet with
Mr. Bert Williams
- The board has refused to respond to shareholders' questions and
inquiries
- One nominee, Mr. Olshansky, has been cited by the SEC for multiple
violations regarding his disclosure of holdings and transactions in
the securities beneficially owned by his partnerships
- Mr. Olshansky was also President of Medstone International, Inc.
during the time Medstone failed to win FDA approval for its
equipment
- Two directors, Messrs. Chelberg and Olshansky, were added to the
board to represent their respective companies' respective business
interests. According to Northfield's 1995 Schedule 14A they were on
the board because of "agreements" that each company "designate an
individual to serve as a director" of Northfield "as long as certain
minimum share ownership requirements are satisfied." The Schedule
14A also indicates that "the share ownership of" the two companies
"no longer satisfies the minimum share ownership requirements
contained in such agreements."
AREAS OF CONCERN - TECHNOLOGY
- Northfield has stated that the FDA had issues with "the validity of
the historical control group, and the actual trial design itself" as
well as with "certain manufacturing processes and `chemistries' the
company plans to use in the production of PolyHeme"
- There are no ongoing Northfield trials and manufacturing standard
operating procedures appear not to be in compliance
- There appears to be no ongoing R&D at Northfield at this time
- Competitors Biopure and Hemosol are gaining ground and appear to
have extensive Phase III operations
- Biopure filed with the FDA on July 31, 2002
- Biopure has received approval in South Africa and is gathering data
on patients
THE COATES AND WILLIAMS ACTION PLAN:
- Gain representation on Northfield's board as independent directors
- Find a major pharmaceutical partner for Northfield to provide cash
and experienced management to get PolyHeme approved by the FDA
- Raise PolyHeme's undeserved low profile
- Ask Northfield to partner with companies to extend the possible
applications of PolyHeme as a transport delivery mechanism for other
drugs
- Work with the Department of Defense and the Homeland Security Agency
to explore the possibility of stockpiling PolyHeme as a safe,
effective blood substitute for emergencies
- Keep investors informed of Northfield news
COATES' AND WILLIAMS' EXPERTISE IN FINANCE, MARKETING, THE FDA REGULATORY
PROCESS AND THE WORLDWIDE DISTRIBUTION OF MEDICAL PRODUCTS WILL SERVE THE
SHAREOWNERS WELL
- For over 20 years, Mr. C. Robert ("Bob") Coates has been the Chief
Executive Officer of Management Insights, Inc., a tax consulting
firm that specializes in tax credits and incentives. In addition,
Mr. Coates has over 15 years of experience in investing in
technology and software companies. Mr. Coates earned a Bachelor of
Arts Degree in Economics with Distinction from the University of
Virginia, an MBA in Finance, and a Ph.D. in Finance, Economics and
Accounting from the University of Chicago. Mr. Coates served on the
Board of Directors of Borland Software Corporation, a publicly
traded company, from June 1999 to February 2000.
- Mr. Bert R. Williams III is the President of Immuno Concepts N.A.
Ltd., a leading manufacturer and worldwide distributor of medical
diagnostic kits. He is responsible for production, marketing,
technical support and operations. He implemented the program that
achieved ISO 9001 certification at Immuno Concepts. Mr. Williams has
also served as Director of Marketing at Immuno Concepts since 1985.
In that role, he was responsible for global strategic marketing
development and direction; he expanded international market
penetration from four countries to more than sixty. He holds a
Bachelor of Science degree from Wayne State University and an MBA
from Marquette University. He also serves as a director of the
Intestinal Health Institute, a non-profit Dallas-based organization.
C. ROBERT COATES IS SUPPORTED BY A SEASONED TEAM
- The Robert Coates Group team includes Wilhelm H. Ruiz, Managing
Director. Mr. Ruiz has over 18 years of experience in the High Tech
Manufacturing, Telecommunications, and Consumer Goods industries,
including over seven years' consulting experience with Ernst & Young
and IBM. He was most recently a Principal in IBM's Business
Innovation Services group helping clients with complex and large-
scale business and IT transformation projects. Prior to IBM Mr. Ruiz
was the Director of Process Innovation at Ameritech. Mr. Ruiz earned
a Bachelor of Science Degree Summa Cum Laude in Aerospace
Engineering, Master of Science Degrees in Mechanical and
Manufacturing Engineering, and an MBA with High Honors all from
Boston University.
- The group also includes Simon A. Goldberg, Life Sciences Project
Manager. Mr. Goldberg's background includes a Bachelor of Science
from the University of Michigan concentrating on Cellular Molecular
Biology and Chemistry and training as a medical geneticist and
genetic counselor at the University of Pittsburgh and their Graduate
School of Public Health. While in Pittsburgh Simon worked as a
molecular geneticist in the field of ophthalmology developing novel
laboratory techniques to facilitate locating genes. Mr. Goldberg
later worked at the American Medical Association (AMA), where he
developed policy concentrating on new medical science, including
molecular medicine, medical genetics, and transplantation. While
working at the AMA Simon completed an MBA at DePaul University. His
business studies concentrated on marketing, entrepreneurship, and e-
business.
NORTHFIELD HAS SHOWN A COMPLETE DISREGARD FOR TRUE CORPORATE GOVERNANCE
PRACTICES
NORTHFIELD'S CORPORATE GOVERNANCE SCORECARD
- Will the majority of Northfield's board be composed of independent
directors? NO
- Is Northfield's nominating committee composed of all independent
members? NO
- Was Northfield working in the best interests of its shareholders
when it "removed" its CEO only to "rehire" him with a 15% increase
in salary? NO
- Did Northfield show good judgment by allowing its "old" CEO to serve
as part of the compensation committee up until 2000? NO
- Did the compensation committee act in the best interest of
shareholders when it increased salaries and options of Northfield's
executives in the face of a declining stock price? And, did it act
wisely in approving over $400,000 in bonuses for filing a deficient
FDA application for PolyHeme in 2002? NO
- Can two of the Northfield-endorsed candidates who earned $60,000 and
$80,000, respectively, in consulting fees and who will continue to
work as consultants be considered independent? NO
- Has Northfield disclosed material information regarding its Phase
III trials and RTF letter from the FDA? NO
- Have two of Northfield's directors (Savner and Chelberg) met the
basic requirements of attending 75% or more of the annual board
meetings? NO
- Has Northfield tried to separate the CEO position from that of the
Chairman of the Board? NO