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.
“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.
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.
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.