Small cap im­munother­a­py play­er Zio­pharm faces an ac­tivist at­tack, re­bukes call for board seats

Zio­pharm On­col­o­gy is at­tempt­ing to fend off an ac­tivist at­tack.

The Boston-based biotech sent a let­ter to share­hold­ers Mon­day urg­ing them to re­ject the pro­pos­als from mi­nor­i­ty in­vestor Wa­ter­Mill As­set Man­age­ment Corp that would re­place half the com­pa­ny’s board. Zio­pharm’s let­ter, which was pub­lished in full Mon­day morn­ing, stat­ed that the firm’s pro­posed three new board mem­bers, in­clud­ing Wa­ter­Mill founder Robert Post­ma, lack the qual­i­fi­ca­tions to run a pub­lic com­pa­ny.

Lau­rence Coop­er

“Giv­en the board’s past re­cep­tive­ness to share­hold­er feed­back in the board re­fresh­ment process, it is dis­ap­point­ing that Wa­ter­Mill, an ap­prox­i­mate­ly 3.3% share­hold­er, is now at­tempt­ing to gain a dis­pro­por­tion­ate amount of in­flu­ence on the board,” Zio­pharm CEO Lau­rence Coop­er and chair­man Scott Tar­riff wrote.

Wa­ter­Mill, mean­while, al­leges that Zio­pharm’s busi­ness plan has been detri­men­tal to share­hold­er val­ue with the com­pa­ny’s stock down rough­ly 50% since the start of 2020. New board mem­bers are need­ed to turn the ship around, Wa­ter­Mill says, and the firm has specif­i­cal­ly re­quest­ed that Tar­riff and three oth­ers step down — Scott Braun­stein, Kevin Buchi and Elan Ez­ick­son.

Scott Tar­riff

Post­ma al­so said in a state­ment that at Zio­pharm’s an­nu­al meet­ing a few months ago, a ma­jor­i­ty of share­hold­ers raised con­cerns about Braun­stein, Ez­ick­son and a third board mem­ber who has since been re­placed. The com­pa­ny pur­port­ed­ly re­spond­ed to the com­plaints with “clear dis­dain” and in­stalled the oust­ed board mem­ber’s boss, de­spite say­ing they’d hire an out­side firm to con­duct a search, Post­ma claims.

“It is now ev­i­dent to us — and hope­ful­ly all oth­er share­hold­ers — that Zio­pharm’s cur­rent lead­er­ship has no cred­i­ble plans to en­hance cor­po­rate gov­er­nance, halt di­lu­tive ac­tions, im­prove dis­clo­sures, align man­age­ment’s com­pen­sa­tion to tan­gi­ble re­sults,” Post­ma said.

Zio­pharm says it has en­gaged with Wa­ter­Mill in good faith and has al­ready im­ple­ment­ed some of the changes ad­vo­cat­ed by the firm, in­clud­ing adding James Huang to the board this past Ju­ly. The com­pa­ny al­so says two of Wa­ter­Mill’s pro­posed new board mem­bers have not ac­cept­ed in­vi­ta­tions for in­ter­views.

Kevin Buchi

Ac­cord­ing to Zio­pharm’s web­site, the com­pa­ny’s newest board mem­ber, Kevin Buchi, joined in Sep­tem­ber. Buchi cur­rent­ly serves as chair­man of Dicer­na Phar­ma­ceu­ti­cals, where the since-oust­ed Zio­pharm board mem­ber, Dou­glas Pagán, is the CFO.

Wa­ter­Mill de­clined to com­ment be­yond Post­ma’s state­ment. Zio­pharm did not re­spond to a re­quest for com­ment by Tues­day morn­ing.

Zio­pharm has seen heavy churn at the board lev­el in the last year and a half, ap­point­ing four new mem­bers since June 2019. It notes that all those new mem­bers have come on board since Zio­pharm sep­a­rat­ed from Pre­ci­gen in 2018.

The biotech’s share prices have not ful­ly re­cov­ered since a pa­tient died in a gene ther­a­py study back in 2016. In that in­stance, the pa­tient de­vel­oped an in­tracra­nial he­m­or­rhage 15 days af­ter start­ing treat­ment, though it was deemed to be un­re­lat­ed to the treat­ment. The ther­a­py was de­signed to di­rect the im­mune sys­tem to at­tack brain tu­mors.

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.

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

Covid-19 vac­cine boost­ers earn big thumbs up, but Mod­er­na draws ire over world sup­ply; What's next for Mer­ck’s Covid pill?; The C-suite view on biotech; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

You may remember that at the beginning of this year, Endpoints News set a goal to go broader and deeper. We are still working towards that, and are excited to share that Beth Snyder Bulik will be joining us on Monday to cover all things pharma marketing. You can sign up for her weekly Endpoints MarketingRx newsletter in your reader profile.

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Roche's Tecen­triq cross­es the fin­ish line first in ad­ju­vant lung can­cer, po­ten­tial­ly kick­ing off gold rush

While falling behind the biggest PD-(L)1 drugs in terms of sales, Roche has looked to carve out a space for its Tecentriq with a growing expertise in lung cancer. The drug will now take an early lead in the sought-after adjuvant setting — but competitors are on the way.

The FDA on Friday approved Tecentriq as an adjuvant therapy for patients with Stage II-IIIA non small cell lung cancer with PD-(L)1 scores greater than or equal to 1, making it the first drug of its kind approved in an early setting that covers around 40% of all NSCLC patients.

No­var­tis de­vel­op­ment chief John Tsai: 'We go deep in the new plat­form­s'

During our recent European Biopharma Summit, I talked with Novartis development chief John Tsai about his experiences over the 3-plus years he’s been at the pharma giant. You can read the transcript below or listen to the exchange in the link above.

John Carroll: I followed your career for quite some time. You’ve had more than 20 years in big pharma R&D and you’ve obviously seen quite a lot. I really was curious about what it was like for you three and a half years ago when you took over as R&D chief at Novartis. Obviously a big move, a lot of changes. You went to work for the former R&D chief of Novartis, Vas Narasimhan, who had his own track record there. So what was the biggest adjustment when you went into this position?

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Amit Etkin, Alto Neuroscience CEO (Alto via Vimeo)

A star Stan­ford pro­fes­sor leaves his lab for a start­up out to re­make psy­chi­a­try

About five years ago, Amit Etkin had a breakthrough.

The Stanford neurologist, a soft-spoken demi-prodigy who became a professor while still a resident, had been obsessed for a decade with how to better define psychiatric disorders. Drugs for depression or bipolar disorder didn’t work for many patients with the conditions, and he suspected the reason was how traditional diagnoses didn’t actually get at the heart of what was going on in a patient’s brain.

Susan Galbraith, Executive VP, Oncology R&D, AstraZeneca

As­traZeneca on­col­o­gy R&D chief Su­san Gal­braith: 'Y­ou're go­ing to need or­thog­o­nal com­bi­na­tion­s'

 

Earlier in the week we broadcast our 4th annual European Biopharma Summit with a great lineup of top execs. One of the one-on-one conversations I set up was with Susan Galbraith, the oncology research chief at AstraZeneca. In a wide-ranging discussion, Galbraith reviewed the cancer drug pipeline and key trends influencing development work at the pharma giant. You can watch the video, above, or stick with the script below. — JC

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FDA ad­comm votes unan­i­mous­ly in sup­port of a J&J Covid-19 boost­er two months af­ter one-dose shot

The FDA’s Vaccines and Related Biological Products Advisory Committee (VRBPAC) on Friday voted 19-0 in favor of authorizing a second shot of J&J’s Covid-19 vaccine to follow at least two months after the initial dose.

Regulators don’t have to follow VRBPAC’s recommendation, but they almost always do. Considering that the CDC’s advisory committee has already been set to review the expanded EUA, VRBPAC’s recommendation is likely to be adopted.

Jacob Van Naarden, Senior VP, CEO of Loxo Oncology at Lilly; President, Lilly Oncology

Eli Lil­ly bags FDA nod for Verzenio in ear­ly breast can­cer, but a con­tro­ver­sial di­ag­nos­tic could dog its roll­out

As Eli Lilly works to consolidate its internal and Loxo teams into an oncology powerhouse, the drug giant is putting high hopes on CDK 4/6 inhibitor Verzenio to help drive the portfolio into the future. Now, the drug has scored a paradigm-altering win in early breast cancer — but will a controversial companion diagnostic hamstring Lilly’s market plans?

The FDA on Wednesday approved CDK 4/6 inhibitor Verzenio in combination with physician’s-choice endocrine therapy to cut the risk of relapse in patients with high-risk HR-positive, HER2-negative breast cancer, Lilly said in a release.

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As TRIPS coun­cil meets, the IP waiv­er for vac­cines is on life sup­port ahead of a De­cem­ber dead­line

The WTO’s TRIPS Council is meeting today and tomorrow to discuss a Covid-19 vaccine IP waiver that remains divisive and unlikely to be adopted thanks to European opposition, but which proponents still think could unlock more vaccine doses for low and middle-income countries.

Following the meetings this week, it’s expected there will be a better sense if some kind of waiver can be agreed to by December, Tahir Amin, an IP lawyer and co-executive director of I-Mak, told Endpoints News.