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STATEMENT PURSUANT TO SECTION 14(a) OF THE
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ARTES
MEDICAL, INC.
(Name of
Registrant as Specified in Charter)
H.
MICHAEL SHACK
(Name of
Person(s) Filing Proxy Statement if Other Than the Registrant)
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Filed:
Dr.
H. Michael Shack
19
Burning Tree Road, Newport Beach, CA 92660
VOTE
THE BLUE PROXY CARD TODAY,
THE
FUTURE OF ARTES MEDICAL DEPENDS ON IT!
October
8, 2008
Dear
Fellow Artes Medical, Inc. Stockholder,
My name
is Dr. H. Michael Shack and I am the Proxy Organizer for the proxy
solicitation contest against Artes Medical, Inc. (the “Company”). I
have been a shareholder of the Company since January 2007 and, like you,
have closely monitored the Company’s performance. As I am sure you are
well aware, under the current Board of Directors and management, the
Company’s stock price has dramatically declined in the last 52 weeks and the
Company has received notice from NASDAQ that it will be delisted from the
NASDAQ Global Market should the Company fail to regain
compliance. In its notice, the NASDAQ informed the Company that
it needs to report shareholder equity of at least $10 million.
I believe
that new leadership is needed to save the Company. This is why I have
organized this proxy contest to replace the Board of Directors at the
upcoming annual meeting to be held on October 30, 2008. I urge all
shareholders to read the enclosed proxy statement carefully and to become
familiar with my proposed slate of directors.
According
to the Board of Directors’ biographies in the Company’s Annual Report filed with
the Securities and Exchange Commission (“SEC”) on March 14, 2008, the Company’s
current Board of Directors lacks any specific industry expertise in the personal
aesthetics market.
According
to the NASDAQ Stock Exchange, the Company’s stock price has declined more than
88% in the last 52 weeks. Within this time period, the Company’s market value
has declined from $134.5 million to approximately $15 million, erasing a
staggering $119.5 million in shareholder value. The Company’s share price
reached an all-time low of $0.35 on September 16, 2008, down from an all-time
high of $9.96 in February 2007.
According
to the Company’s Current Report on Form 8-K filed with the SEC on August 22,
2008, on August 19, 2008, the Company received a notice from NASDAQ indicating
that its stockholders’ equity on June 30, 2008 was less than the $10 million
required for continued listing on The NASDAQ Global Market under Marketplace
Rule 4450(a)(3).
The
current management and Board of Directors are responsible for canceling a signed
distribution agreement on March 5, 2007 with a Taiwanese corporation that would
have given the Company a minimum of $4.2 million in combined revenues from sales
of Artefill® in Taiwan during the first two years of the contract
alone.
In the
Company’s Annual Report on Form 10-K filed with the SEC on March 14,
2008, the Company has pledged ALL of its assets against a $22.5 million
revenue financing entered into with COWEN Healthcare Royalty Partners (“CHRP”)
in January 2008. All assets of the Company will revert to CHRP in case of the
Company’s default to service future royalty obligations.
According
to the Company's Annual Report on Form 10-K filed with the SEC on March 14,
2008, the current management and Board of Directors are responsible for
forfeiting an estimated minimum of $20 million in additional future royalty
revenues from Bioform Medical over the lifetime of the Company’s ‘452 core
technology patent by settling for one lump sum payment of $5.5 million, which
generated a one-time only increase in revenues for the third quarter in 2007 as
outlined in the financial statements of the Company’s quarterly and annual
filings with the SEC.
According
to the 2007 statistics of the American Society for Aesthetic Plastic Surgery
(“ASAPS”), the market penetration of ArteFill® was a dismal 12,075 (0.07%)
procedures in 2007 compared to 119,397 (6.9%) procedures for Radiesse®
semi-permanent filler marketed by Bioform Medical, Inc. under license of Artes
Medical’s ‘452 core technology patent. The number of total injectable soft
tissue filler procedures in the United States was 1,723,476.1 The target number of patients
treated with ArteFill® in year two was initially forecasted at
40,000 patients, however, as indicated in a press release by the Company
dated July 28, 2008, only 10,000 patients have been treated within the first 18
months since ArteFill®’s U.S. market introduction.
VOTE
TODAY – HELP ME TURN THE COMPANY AROUND
I am
proposing shareholders elect highly qualified new directors with direct
experience in the medical device industry, including the personal aesthetics
industry, as well as a highly qualified new team of professionals to assume
management responsibilities immediately upon a successful outcome at the
annual meeting. The enclosed proxy statement details the biographies
of this distinguished team. With their help and support, I have also put
together a turn-around strategy for the Company.
VOTE
“FOR” ON THE BLUE CARD
TODAY!
|
1.
|
Amend
the Bylaws of the Company to allow a majority of stockholders to fill
vacancies on the Board of Directors resulting from the removal of any
Director;
|
|
2.
|
Amend
the Bylaws to increase the number of directors from seven to
eleven;
|
|
3.
|
Remove
three of the current Directors of the Company under Delaware General
Corporation Law Section 141(k)(1) for
cause;
|
|
4.
|
Elect
four new Directors to fill the newly created directorships pursuant to
Proposal #2 of the proxy statement or if Proposal #2 is defeated, elect
three new Directors to fill the three vacancies created by the removal
contained in Proposal #3 of the Proxy Statement;
and
|
|
5.
|
Vote
on the election of two new Class II Directors to serve for three year
terms until the annual meeting of Stockholders in 2011 or until their
successors are duly elected and
qualified.
|
YOUR VOTE
IS URGENTLY NEEDED!
The
nominees for the new Board of Directors propose to turn the Company around
by providing the leadership and experience necessary to re-establish enthusiasm
and morale among employees and credibility among customers and the financial
community. These new directors will focus on significant cost
reductions, implement new sales and marketing strategies, implement peer-to-peer
ArteFill® training and seminars to engage more physicians in the use of
ArteFill®. In addition, they pledge to pursue international market
opportunities for ArteFill® and develop new medical indications such
as the treatment of heartburn (GERD) and spinal disk repair with the Company’s
platform technology. These board nominees are experienced in the areas of
medical devices including dermal fillers, investment banking, corporate law, and
have experience acting as members of the board of directors of other public
companies.
Our proxy
solicitation firm, MacKenzie Partners, Inc., can assist you in voting your
shares and will answer all your questions. They can be reached at
toll-free at (800) 322-2885 or (212) 929-5500 and via email at
proxy@mackenziepartners.com.
VOTE THE
BLUE PROXY CARD TODAY!
Please
return your enclosed BLUE proxy card today
to implement positive changes the Company. Even if you have already
voted the proxy card submitted by Artes Medical, I ask for your vote as only
your latest dated proxy card will count at the annual meeting.
Most
sincerely,
Dr. H
Michael Shack
FORWARD-LOOKING
STATEMENTS
This
letter to stockholders contains forward-looking statements that are based on the
Proxy Organizer’s current beliefs and assumptions and on information currently
available to the Proxy Organizer. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause the
Company’s actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by the
forward-looking statements. As a result of these risks, uncertainties
and other factors, readers are cautioned not to place undue reliance on any
forward-looking statements included in this letter to
stockholders. These forward-looking statements represent beliefs and
assumptions only as of the date of this letter, and the Company assumes no
obligation to update these forward-looking statements publicly, even if new
information becomes available in the future.
IMPORTANT
ADDITIONAL INFORMATION
On
October 6, 2008, the Proxy Organizer filed a definitive proxy statement with the
Securities and Exchange Commission (the “SEC”) in connection with the
solicitation of proxies for the Company’s 2008 annual meeting of stockholders
(the “Proxy Statement”). The Proxy Organizer is mailing the attached Proxy
Statement to stockholders prior to the annual meeting. The Proxy Statement
contains important information about the Company and the annual meeting. The
Company’s stockholders are urged to read the Proxy Statement
carefully. Stockholders will be able to obtain copies of the Proxy
Organizer’s 2008 Proxy Statement and other documents filed by the Company with
the SEC in connection with the Company’s 2008 annual meeting of stockholders for
free at the SEC’s website at www.sec.gov. The Proxy Organizer is
deemed a participant in the solicitation of proxies from stockholders in
connection with the Company’s 2008 annual meeting of stockholders. ALL PROXY
DOCUMENTS ARE ALSO AVAILABLE IN GERMAN LANGUAGE UPON REQUEST FROM MACKENZIE
PARTNERS.
The
contents of the websites referenced above are not deemed to be incorporated by
reference into the Proxy Organizer’s Proxy
Statement.