18 Jun Sandon Capital seeks to turf out biotech Alchemia founder Tracie Ramsdale and chairman Tim Hughes
THE founding scientist of Brisbane drug developer Alchemia is facing the threat of getting dumped from her own company.
An activist fund manager, Sandon Capital, on Thursday launched an attempt to dump founder Tracie Ramsdale and chairman Tim Hughes from the board, after Alchemia lost massive amounts share value.
It marks the latest turmoil in the high-risk, high-reward life sciences sector, where a high amount of drug trials fail.
Alchemia, which has accumulated losses of $145 million, was once a star hope of Queensland’s Smart State biotechnology sector. It has an anti-clotting drug marketed in the US, but sales are dwindling and a marketing contract is in dispute. Further, stock was pummelled after a trial of an anti-cancer treatment failed last year.
The company now expects to have $2 million of free cash leftover by June’s end and has been cutting costs.
But Sydney-based activist fund manager Sandon Capital Investments, which started investing this year and has accumulated a 13.2 per cent stake in Alchemia, now wants to tip out Mr Hughes and Dr Ramsdale. They plan to install Sandon’s Gabriel Radzyminski and independent director Ken Poutakidis, of Dinimus Capital.
“We believe that the current board … should have acted differently,” Mr Radzyminski told The Courier-Mail. “We think they should have cut costs much faster and much further.”
He argued that a fresh set of eyes would do better. Under Sandon’s plan, current Alchemia director Nathan Drona would remain, but Mr Radzyminski said they were not acting in concert.
Mr Hughes, a former Courier-Mail economics columnist, said they had not considered stepping aside at the moment. The board was focused on the published strategy of cost-cutting, asset sales and getting the “best possible deal” in contract negotiations for the anti-clotting drug, he said.
Sector setbacks for tissue, but light on horizon elsewhere
The Queensland sector has also suffered with constant, costly regulatory setbacks to Tissue Therapies launching its wound-healing product in Europe. Tissue has repeatedly missed guidance since 2012 of cracking the European market, blaming a serious of regulatory backflips, and recently its chairman and chief executive left.
Bioshares analysts this month argued Tissue’s shareholders were “badly served by a strategy that was initially deemed to be a straightforward fast track” and let down by “poor communications”.
They also warned delays in getting to market “mean that the potential for effective and competitive wound-healing technologies to emerge and gain market acceptance … has increased”.
On the flip side, some life-science stocks are managing to trade above their float price. Brisbane-based Anatara, which is trying to revive a drug used to stop pigs getting diarrhoea, had shares close at 90¢ on Thursday, after floating at 50¢ a share in October last year.
While the product has faced some industry scepticism, Anatara chairman Mel Bridges, who is also on the board of Tissue, argued that investors were giving very positive feedback. “(Sentiment overall) seems very positive, particularly in this agri-biotechnology area,” he said.
He linked that partly to the decline of demand for resource sector stocks.
Anatara on Thursday announced a second trial would start, and Mr Bridges stuck by prospectus guidance of sales by mid 2016.
Renewed state interest in life sciences
Meanwhile Impedimed, which makes a device for detecting a swelling ailment linked to cancer, has seen stock rise from 17¢ this time last year to close at 85.6¢ on Thursday.
The life sciences sector also has been getting greater attention from the new State government, with Anna Palaszczuk reinstituting the role of premiers attending the world’s biggest biotechnology conference BIO, which took place this month in the US.
While there, Premier Palaszczuk made announcements including that the QIMR Berghofer Medical Research Institute had gotten approval to make cancer therapies for use in humans.
Still, some industry participants have remained sanguine about massive change for Queensland’s life-sciences sector.
A recent life-sciences forum heard aims of the “Smart State”, an era of former Premier Peter Beattie that focused on biotechnology, had succeeded in bringing new scientists but not in heavily boosting State finances.
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Author: Liam Walsh
Published: June 18, 2015
Source: The Australian Financial Review