In a bit­ter brawl, Arc­turus de­tails ex-CEO's al­leged mis­con­ducts in law­suit and open let­ter

Joseph Payne

The drawn out fight be­tween Arc­turus Ther­a­peu­tics $ARCT and its ex-CEO Joseph Payne has tak­en a nasty turn: Arc­turus is now seek­ing dam­ages and in­junc­tive re­lief in a law­suit.

Late Tues­day, al­most two months af­ter Payne was kicked out of the com­pa­ny, the RNA biotech is de­tail­ing his “mul­ti­ple” al­leged mis­con­ducts. Those in­clude op­er­at­ing a “lu­cra­tive side busi­ness dur­ing busi­ness hours” and at­tempt­ing to trans­fer Arc­turus’ IP for no ap­par­ent rea­son dur­ing his tenure, in ad­di­tion to or­ches­trat­ing a move to block Arc­turus’ rou­tine au­dit­ing ac­tiv­i­ty. It fol­lowed up Wednes­day with a strong­ly word­ed open let­ter to share­hold­ers on Wednes­day, in hopes that they would take the board’s side when the time comes to vote on the di­rec­tors.

Some of these al­le­ga­tions, the com­pa­ny writes, came to light in an in­ves­ti­ga­tion fol­low­ing his ter­mi­na­tion — which, in case you haven’t heard, was main­ly due to the com­pa­ny’s wide­ly broad­cast claim that Payne breached his “fidu­cia­ry du­ties to Arc­turus” in late Jan­u­ary.

We have un­cov­ered mul­ti­ple in­stances where Mr. Payne at­tempt­ed to de­ceive, ma­nip­u­late and lie to our share­hold­ers, part­ners and oth­er stake­hold­ers.

Ac­cord­ing to the com­plaint, in the days lead­ing up to his fir­ing, Payne came up with a deal to trans­fer “sub­stan­tial amounts” of Arc­turus’ IP in can­cer vac­cines to Prov­i­dence Ther­a­peu­tics, where his “life­long per­son­al friend and oc­ca­sion­al busi­ness part­ner” Bradley Soren­son was CEO. He tried to force the board in­to au­tho­riz­ing the trans­fer, with­out ar­tic­u­lat­ing a busi­ness rea­son for do­ing so.

As for the side busi­ness, Arc­turus says he re­cruit­ed at least two Arc­turus em­ploy­ees to help him sell chem­i­cal prod­ucts to cor­po­rate buy­ers, vi­o­lat­ing his em­ploy­ment agree­ment. This “undis­closed, unau­tho­rized” gig played out for near­ly three years, tak­ing “sub­stan­tial time and en­er­gy” away from his CEO role (which he re­port­ed­ly lever­aged in ne­go­ti­a­tions for his ven­dor busi­ness).

Payne took the first pub­lic swing in the bat­tle roy­al, claim­ing that four board mem­bers con­spired on his ouster. But then Arc­turus hit back with its own state­ment, even as it com­plied with Payne’s re­quest to vote on new board mem­bers. That vote won’t take place un­til an spe­cial share­hold­er meet­ing May, but the board — es­pe­cial­ly the four whom Payne want­ed out — is ea­ger to pull in­vestors to their side by show­ing them the “re­al Joe Payne.” The lengthy open let­ter re­peats ear­li­er claims that Payne ex­ploit­ed Arc­turus, putting his own in­ter­ests over share­hold­ers’. It al­so fea­tured a new at­tack: Payne was a “weak CEO” who showed poor judg­ment and, up­on learn­ing that there were prob­lems with Arc­turus’ part­ner­ships, nei­ther fixed them nor re­port­ed to the board.

And in a sign of just how an­tag­o­nis­tic both par­ties have got­ten, the board made sure to in­clude this line in the let­ter:

Fol­low­ing re­peat­ed re­quests from Arc­turus and our at­tor­neys, we re­cent­ly re­ceived back from Payne his Com­pa­ny-is­sued-and-paid-for cell phone, more than two months fol­low­ing his ter­mi­na­tion. The de­vice had been re­set to its fac­to­ry set­tings, a move by Payne that delet­ed all in­for­ma­tion con­tained on the phone. This rais­es the ques­tion of ‘what else is Payne hid­ing from Arc­turus and its share­hold­ers?’

The fight will now play out in the su­pe­ri­or court in San Diego, where Arc­turus is based.

Hal Barron, GSK

Break­ing the death spi­ral: Hal Bar­ron talks about trans­form­ing the mori­bund R&D cul­ture at GSK in a crit­i­cal year for the late-stage pipeline

Just ahead of GlaxoSmithKline’s Q2 update on Wednesday, science chief Hal Barron is making the rounds to talk up the pharma giant’s late-stage strategy as the top execs continue to woo back a deeply skeptical investor group while pushing through a whole new R&D culture.

And that’s not easy, Barron is quick to note. He told the Financial Times:

I think that culture, to some extent, is as hard, in fact even harder, than doing the science.

Endpoints News

Basic subscription required

Unlock this story instantly and join 55,200+ biopharma pros reading Endpoints daily — and it's free.

Aca­dia is mak­ing the best of it, but their lat­est PhI­II Nu­plazid study is a bust

Acadia’s late-stage program to widen the commercial prospects for Nuplazid has hit a wall. The biotech reported that their Phase III ENHANCE trial flat failed. And while they $ACAD did their best to cherry pick positive data wherever they can be found, this is a clear setback for the biotech.

With close to 400 patients enrolled, researchers said the drug flunked the primary endpoint as an adjunctive therapy for patients with an inadequate response to antipsychotic therapy. The p-value was an ugly 0.0940 on the Positive and Negative Syndrome Scale, which the company called out as a positive trend.

Their shares slid 12% on the news, good for a $426 million hit on a $3.7 billion market cap at close.

Endpoints News

Basic subscription required

Unlock this story instantly and join 55,200+ biopharma pros reading Endpoints daily — and it's free.

Some Big Phar­mas stepped up their game on da­ta trans­paren­cy — but which flunked the test?

The nonprofit Bioethics International has come out with their latest scorecard on data transparency among the big biopharmas in the industry — flagging a few standouts while spotlighting some laggards who are continuing to underperform.

Now in its third year, the nonprofit created a new set of standards with Yale School of Medicine and Stanford Law School to evaluate the track record on trial registration, results reporting, publication and data-sharing practice.

Busy Gilead crew throws strug­gling biotech a life­line, with some cash up­front and hun­dreds of mil­lions in biobucks for HIV deal

Durect $DRRX got a badly needed shot in the arm Monday morning as Gilead’s busy BD team lined up access to its extended-release platform tech for HIV and hepatitis B.

Gilead, a leader in the HIV sector, is paying a modest $25 million in cash for the right to jump on the platform at Durect, which has been using its technology to come up with an extended-release version of bupivacaine. The FDA rejected that in 2014, but Durect has been working on a comeback.

In­tec blitzed by PhI­II flop as lead pro­gram fails to beat Mer­ck­'s stan­dard com­bo for Parkin­son’s

Intec Pharma’s $NTEC lead drug slammed into a brick wall Monday morning. The small-cap Israeli biotech reported that its lead program — coming off a platform designed to produce a safer, more effective oral drug for Parkinson’s — failed the Phase III at the primary endpoint.

Researchers at Intec, which has already seen its share price collapse over the past few months, says that its Accordion Pill-Carbidopa/Levodopa failed to prove superior to Sinemet in reducing daily ‘off’ time. 

Cel­gene racks up third Ote­zla ap­proval, heat­ing up talks about who Bris­tol-My­ers will sell to

Whoever is taking Otezla off Bristol-Myers Squibb’s hands will have one more revenue stream to boast.

The drug — a rising star in Celgene’s pipeline that generated global sales of $1.6 billion last year — is now OK’d to treat oral ulcers associated with Behçet’s disease, a common symptom for a rare inflammatory disorder. This marks the third FDA approval for the PDE4 inhibitor since 2014, when it was greenlighted for plaque psoriasis and psoriatic arthritis.

Endpoints News

Basic subscription required

Unlock this story instantly and join 55,200+ biopharma pros reading Endpoints daily — and it's free.

Francesco De Rubertis

Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

Endpoints News

Basic subscription required

Unlock this story instantly and join 55,200+ biopharma pros reading Endpoints daily — and it's free.

Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

Endpoints News

Basic subscription required

Unlock this story instantly and join 55,200+ biopharma pros reading Endpoints daily — and it's free.

Vlad Coric (Biohaven)

In an­oth­er dis­ap­point­ment for in­vestors, FDA slaps down Bio­haven’s re­vised ver­sion of an old ALS drug

Biohaven is at risk of making a habit of disappointing its investors.

Late Friday the biotech $BHVN reported that the FDA had rejected its application for riluzole, an old drug that they had made over into a sublingual formulation that dissolves under the tongue. According to Biohaven, the FDA had a problem with the active ingredient used in a bioequivalence study back in 2017, which they got from the Canadian drugmaker Apotex.

Apotex, though, has been a disaster ground. The manufacturer voluntarily yanked the ANDAs on 31 drugs — in late 2017 — after the FDA came across serious manufacturing deficiencies at their plants in India. A few days ago, the FDA made it official.

Endpoints News

Basic subscription required

Unlock this story instantly and join 55,200+ biopharma pros reading Endpoints daily — and it's free.