Minority investor WaterMill succeeds in activist attack of Ziopharm, winning two board seats and removal of chairman
The activist attack launched at Ziopharm Oncology $ZIOP that turned into an ugly and bitter public feud has come to a conclusion.
Two of the three board nominees put forth by 3.3% minority investor WaterMill Asset Management Corp. will be joining Ziopharm’s board after receiving the necessary 50%+ votes from shareholders, WaterMill said Thursday morning. Additionally, a majority of Ziopharm shareholders voted to recall chairman Scott Tarriff, the firm said.
Notably, WaterMill founder Robert Postma, who first initiated the attack in early November, is not joining the board despite also gaining enough support from investors, WaterMill said. Ziopharm’s board is capped at eight members and had previously stood at seven prior to the voting deadline, allowing for only the two who received higher vote shares to join with Tarriff’s removal.
In early November, WaterMill began its attack seeking to replace three board members and Tarriff with three individuals: Postma, Jaime Vieser and Holger Weis. Two members of the board targeted by WaterMill resigned in the following weeks and one still remains.
“We welcome Messrs. Vieser and Weis as the newest members of Ziopharm’s Board of Directors,” Ziopharm said in a statement. “We also wish to thank Scott Tarriff, a member of the Board since 2015 and Chairman since 2018, for the numerous positive contributions and tireless commitment to the patients we hope to serve.”
Full results of the vote will not be available until Ziopharm files an update with the SEC, and the timing of the 8-K remains unclear, a company spokesman told Endpoints News. Ziopharm declined to comment on the vote and the status of Postma’s position beyond its press release.
In a statement, Postma said that Vieser and Weis “are fully committed to putting this contest behind them and immediately helping the Board chart the right path forward.” He later added:
While we anticipate that many supportive shareholders will be disappointed that our full slate is not joining the Board at this time, WaterMill is constructively engaging with Ziopharm to try to ensure that the message sent by a critical mass of investors is respected. WaterMill remains committed to always doing what is best for Ziopharm.
It’s not yet clear if WaterMill will continue pushing for the last individual to step down and be replaced with Postma, or if that action falls under what Postma says is “best” for the company.
Though the minority investor officially began its attack in early November, the Ziopharm brouhaha had stemmed from months of simmering feelings over the company’s direction. WaterMill and other investors had raised objections over a former board member at Ziopharm’s annual meeting over the summer, and that individual was replaced in September.
Then the board replacement bid began, with WaterMill seeking the ascension of all three of Postma, Vieser and Weis in order to truly right the ship. At the time the attack began, Ziopharm shares were down roughly 50% since the start of 2020, with WaterMill claiming the board as then constituted responded to complaints with “clear disdain” and installed the ousted board member’s boss, despite saying they’d hire an outside firm to conduct a search.
Things only got uglier from there, with Ziopharm attempting to paint one of WaterMill’s nominees — Weis — as uniquely unqualified to serve on the board. The company cited public bankruptcy filings from the biotech DemeRx in 2018, which Ziopharm said showed Weis’ history of corporate malpractice.
WaterMill countered by saying Ziopharm was engaging in a “desperate, low-road smear campaign,” citing statements from two former DemeRx executives who vouched for Weis. Though Ziopharm’s board saw heavy churn over the last six months, Tarriff and CEO Laurence Cooper had not replaced any of the departing members with WaterMill nominees.
Ziopharm’s share prices have not fully recovered since a patient died in a gene therapy study back in 2016 after developing an intracranial hemorrhage 15 days after starting treatment. The death was deemed to be unrelated to the treatment.
Then in 2018, Ziopharm was forced to hit the brakes on a CAR-T therapy when the FDA placed a clinical hold on its Phase I study of a treatment that could be built in 2 days to express CD-19, IL-15 and a safety switch for CD-19/positive leukemias and lymphomas. Earlier this year, though, Ziopharm saw some early, positive overall survival data for their controlled IL-12 treatment in glioblastoma. The company is also looking at combining that experimental drug with Regeneron’s Libtayo.