Secret meetings, mergers and a board putsch: Arcturus founder/CEO claims 4 board members conspired on his ouster

News of Joseph Payne’s abrupt departure from San Diego-based Arcturus $ARCT left little doubt that he had been kicked out of the microcap RNA biotech. But now he’s fighting back.

Payne, who helped found the company, had his attorneys draft a letter to Arcturus claiming that he had been improperly pushed out by a cabal of 4 company directors, who he says engaged in an intrigue that violated the rules established by the Israeli laws that govern its operations. And a reverse merger he used to take the company public is being blamed for the sudden power shift, according to the letter included in a filing today at the FDA.

Joseph Payne

Payne claims in the letter from Barnea, Jaffa, Lande & Co that he was the victim of a putsch organized on January 25 by these 4 board members: executive chairman Stuart Collinson, executive coach Craig Willett, Alcobra vet Daniel Geffken and Intercept CMO David Shapiro. And after voting to expel him — in a meeting that avoided inviting him as well as CSO Pad Chivukula, another board member — they ordered him escorted out of the building.

Payne’s letter in particular points the finger at executive chairman Stuart Collinson for his involvement in the move to oust him from the CEO job. The move, it says, hurts the company in favor of their personal interests — “acting to seize control of the Company and thus advance their personal and conflicting interests.”

The company says Payne isn’t coming back.

He was terminated, Arcturus said in a statement, “for conduct that our Board of Directors deemed to be contrary to the best interests of the Company and its shareholders. Our Board believes that Mr. Payne has demonstrated that he is unable to put the needs of the company and its shareholders ahead of his own self-interest.”

Payne’s letter, though, makes clear that he wants the company to reverse the move and reinstate him as CEO — or face the consequences in an Israeli court. And he’s threatening to push for a change in the board as well. From the letter:

If the Board intends to argue that the actions were approved by a committee comprised of the Four Directors, we note that any such “committee” has never been formed or approved by the Board and any such “committee” has no authority to act for the Board. Moreover, any delegation to such “committee” without proper approval and resolution violates the Companies Law and the Articles.

Arcturus reverse merged its way onto the market last fall, executing a deal with the failed Alcobra. Soon after, Payne worked a collaboration deal with J&J on hep B. The Alcobra pact, though, left him with new board members that came in from the failed company. And that, he says, played a big role in his sudden exit.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
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Atlas Venture Cambridge, MA

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