A few weeks after Aeterna Zentaris’ lead drug Zoptrex flopped in a Phase III trial of endometrial cancer, the board and the CEO at the biotech were engaged in a brutal internal battle. On July 20, CEO David Dodd was booted for failing to carry out the “express directives” of the board, the company says. And about a week later, Aeterna general counsel Philip Theodore followed him out the exit.
That’s when the company $AEZS claims they found documents outlining a plan to orchestrate a board takeover that would leave Dodd in control of Macrilen, its failed growth hormone therapy that has now been refiled with the FDA for review after it was rejected three years ago. And the biotech has filed a lawsuit to pursue its claims and prevent any proxy fight.
In a blow-by-blow account provided by the Charleston, SC-based company, the board claimed that in or before June Dodd had plotted to transfer control of Macrilen to RiversEdge BioVentures, LLC, or another entity he owned, after the Zoptrex failure had eviscerated the company’s stock. Later Dodd and Theodore allegedly went to an activist investor Graeme Roustan in pursuit of a plan to take control of the board.
According to a statement from the company today:
Their plans were only uncovered through an investigation following the termination of Mr. Dodd as CEO. Among other things, the Board discovered a document created by Mr. Theodore entitled “Outline of Proposed Agreement with Graeme Roustan”, which detailed some of the particulars of how Messrs. Roustan, Theodore, and Dodd intended to mount the proxy contest.
We haven’t heard Dodd’s side of the story. Board chair Carolyn Egberthair had this to say:
We are dismayed and appalled at the actions of Mr. Dodd and Mr. Theodore and we are acting quickly and decisively to protect the interests of our employees and shareholders. In our Claim, we ask the Court to prevent Mr. Dodd and Mr. Theodore from using or conveying the Company’s confidential information, including to seize control of the Board through a proxy contest. We refuse to allow Mr. Dodd or Mr. Theodore to disrupt the Company’s focused effort in bringing Macrilen to market and maximizing value for all of our stakeholders.
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