The letter, dated April 19, cautioned the directors of the Belleville, Ont.-based company against attempting to entrench its current board or management which, they said, have a "dismal record" that has resulted in a steep drop in stock value.
Although the letter signed by two former Biovail executives doesn't make specific threats, it says they lead a group with more than five per cent of Bioniche shares — sufficient to call for a shareholder meeting to remove the current board.
Bioniche responded by saying it has been reviewing several strategic partnering and investment-related offers over recent months and suggested the dissident shareholder group haven't come up with the best alternative.
"The company has been in discussions with external advisers, and a major U.S. investment bank is being engaged to manage this process," Bioniche said.
"The individuals behind the letter have had access to confidential corporate information within the past few months and have made two overtures to the company which do not favourably compare to the opportunities under review."
The stock was up five cents at 32 cents on the Toronto Stock Exchange in trading Monday, its highest since March 11.
The dissident letter to Bioniche chairman James Rae was signed by Bill Wells, a former chief executive of Biovail Corp. and Greg Gubitz, a former Biovail senior vice-president for corporate development.
"As you know, members of our group executed the extremely successful turnaround of Biovail Corp. and subsequent merger with Valeant Pharmaceuticals International Inc., thereby creating billions of dollars in shareholder value for Biovail's shareholders," the Wells and Gutitz letter states.
"Together we have decades of experience in the life sciences industry and in fixing troubled businesses. Our track record of creating value for shareholders is clear. Just as clear is the dismal record of Bioniche's management and board of destroying shareholder value.
Last week, a Quebec-based fund manager sold its entire 5.7 per cent stake in Bioniche — about six million shares.
Bioniche president and chief executive Graeme McRae said on Friday that the sale by the Fonds de solidarite FTQ, one of the company's largest shareholders, was as a surprise.
Bioniche researches, develops, manufactures and commercializes health products used to treat humans and animals.