Author: Luke Timmerman

Luke Timmerman wrote:

AVI Biopharma CEO Les Hudson has been ousted as part of a boardroom shakeup. The Bothell, WA-based biotech company (NASDAQ: AVII) said today that chief financial officer David Boyle will take his place as interim president and CEO through an agreement with activist shareholders.

AVI Biopharma director K. Michael Forrest is also stepping down from the board, and being replaced by Anthony Chase. That leaves AVI Biopharma with a seven-member board made up entirely of independent directors. Christopher Henney, the former CEO of Seattle-based Dendreon, and fellow director Michael Casey are not running for re-election at this year’s annual meeting, so two new faces will soon be joining the company’s board.

The shuffling at the top was part of an agreement with a group of shareholders composed of George Haywood, Cheryl Haywood, Rockall Emerging Markets Master Fund Limited, Meldrum Asset Management, Con Egan, and Conor O’Driscoll, according to an AVI statement. The company didn’t explain why the change was necessary, and only described it in the vaguest of terms. A company spokesman didn’t immediately return an e-mailed request for comment.

“This agreement reflects the Board and management team’s focus on serving the best interest of all AVI shareholders and building on the strong foundation we have in place,” said Michael Casey, chairman of the AVI board, in a statement.

AVI Biopharma has a long and somewhat tortured history. As I pointed out in a breaking news story last July, it is one of the oldest companies in biotech, having sputtered around since 1980 without ever developing an FDA-approved drug, burning through more than $250 million in investor cash, and never becoming profitable. But the company showed some new life last year, raising more than $50 million from investors during the year, adding capital from government grants, and moving to the Seattle area to recruit more staff.

Since Hudson joined in February 2008, he has pushed forward AVI’s technology for precisely blocking specific strands of RNA as a new mode of developing drugs. AVI is using this science to work on experimental treatments for Duchenne muscular dystrophy, and against really dangerous potential bioterrorist agents that conventional drugs can’t stop—Ebola and Marburg virus.

The company is eagerly awaiting detailed results from an early-stage clinical trial later this year for its Duchenne muscular dystrophy treatment, which I previewed in this feature back in February. But this hasn’t been enough to float the boat for investors. AVI Biopharma stock sold for $1.23 in early trading this morning, down just a penny on the news of Hudson’s departure, and still a far cry from the company’s 52-week high of $2.73.

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Luke Timmerman wrote:

One of the big ideas in diabetes research today is that inflammation is one of the major culprits. Tamp down inflammation, and maybe you can reduce the assault on blood vessels that leads to all sorts of complications like heart attacks, blindness, and amputations. If this can be proven over time, Cambridge, MA-based Catabasis Pharmaceuticals might have just the drugs to stop the inflammation and all its nasty effects.

That’s the concept anyway, and it’s one that Catabasis is being richly financed to pursue. The Cambridge, MA-based company has secured a $39.6 million Series A financing from SV Life Sciences, Clarus Ventures, and MedImmune Ventures. We first broke the story last week saying that Catabasis pocketed the first $7.7 million tranche of this deal. CEO Jill Milne confirmed the figure today, adding that Catabasis will get the rest of the money if it can hit certain development goals.

The Catabasis story began in the summer of 2008 when Milne and her colleague Mike Jirousek decided to leave senior jobs at Sirtris Pharmaceuticals after it was acquired by GlaxoSmithKline. They started talking with Steven Shoelson, a leading researcher at Harvard Medical School and the Joslin Diabetes Center, about the emerging understanding of inflammation as an underlying culprit in diabetes. The diabetes market is one of the biggest in the pharmaceutical industry, with an estimated 24 million people in the U.S.—almost one out of every 12 people—suffering from adult-onset or Type 2 diabetes. Incidence has roughly tripled over the past three decades as more people eat unhealthy diets, and live sedentary lives.

The pharmaceutical market has responded to this epidemic by flooding doctors and patients with drugs like metformin, various forms of insulin, GLP-1 inhibitors, and DPP4 inhibitors that work in different ways to keep blood sugar under control. Yet despite all that intense effort at every Big Pharma company, no one has yet gotten a drug approved for Type 2 diabetes that works by controlling inflammation.

“This is a novel way of treating the disease,” Milne says. “It got me excited.”

Catabasis has a plan to tackle this problem with what amounts to a combination drug strategy. Milne and Jirousek, who are trained in biochemistry and chemistry, respectively, started piecing this plan together after they heard about some promising results from Shoelson’s research. His team had shown that a generic anti-inflammatory drug, a type of salicylate, was effective at helping reduce blood sugar in a clinical trial. But there was a catch. The patients had to get a whopping 4 grams a day, and take their pills three times daily. And, researchers saw a case of tinnitus, a serious condition in which people suffer from ringing in their ears, which isn’t an effect the FDA or patients would consider allowable for treating a chronic condition like diabetes.

“That was not acceptable,” Milne says.

While some scientists have pursuing the anti-inflammatory hypothesis, others have been studying Omega-3 fatty acids—those heralded substances in fish oil …Next Page »

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Luke Timmerman wrote:

Seattle-based HemaQuest Pharmaceuticals has nailed down a full Series B round of financing worth $12 million, according to a company statement. This means HemaQuest has secured a second installment of $6 million, after grabbing the first chunk of cash in late January, which we first reported based on a regulatory filing.

The complete deal is being led by a new investor, San Francisco-based Aberdare Ventures. The financing also included HemaQuest’s crew of original backers: Palo Alto, CA-based De Novo Ventures, San Diego’s Forward Ventures, and Lilly Ventures, the startup investment arm at Indianapolis-based Eli Lilly (NYSE: LLY). Naheed Misfeldt, a partner at Aberdare, is joining the HemaQuest board in connection with the financing, the company said in a statement.

HemaQuest is led by a familiar biotech name in Seattle—Ron Berenson, a former cancer physician at the Fred Hutchinson Cancer Research Center who went on to be a co-founder of Xcyte Therapies and CellPro. Those two companies failed, but his third venture, HemaQuest, got off to an auspicious start when it raised a $20 million Series A venture round in November 2007. The company, based on research from the University of Washington, Boston University, and Colorado State University, was founded in Newton, MA. HemaQuest never issued a statement when it moved to Seattle, but it appears to have arrived here last spring, based on scanning datelines from its press release archive. (It sure looks like a Seattle company now, with a beautiful picture of the Space Needle and Mount Rainier on its website.)

What is HemaQuest doing with that $32 million it has raised in the past few years? It is developing “short-chain fatty acid” molecules for life-threatening blood disorders. The company has two experimental drugs now in the middle stage of drug development—one for sickle cell anemia, and one for patients with lymphoma that’s associated with an infection of Epstein-Barr virus. If those trials are successful, Hemaquest says it’s possible it could enter the third and final phase of clinical trials as soon as 2011.

“HemaQuest is working in areas of increasing interest to investors and the pharmaceutical industry; serious and life‐threatening orphan diseases in which patients have few therapeutic options,” Aberdare’s Misfeldt said in a statement. “They have made great progress with their first two drug candidates.”

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Luke Timmerman wrote:

The folks at San Diego-based Phenomix are wrestling with some serious cognitive dissonance today, which is a fancy way of saying they got some serious bad news mixed in with some good news.

First, the bad news. Phenomix’s U.S. partner, New York-based Forest Laboratories (NYSE: FRX), said today in its quarterly financial report that it has terminated its alliance with Phenomix to develop dutogliptin, an experimental drug for diabetes. That decision came after Phenomix unveiled results from its first pivotal-stage clinical trial of the treatment. And that’s the confusing part. Phenomix said today the study of 544 diabetic patients showed its drug reached its primary goal, and all of the secondary readouts, which suggests it is comparable to other medicines in its class in terms of safety and effectiveness, CEO Laura Shawver says.

Forest didn’t bother to explain its decision in a conference call with analysts today, other than to say it dumped the Phenomix deal “for business reasons.” Part of Forest’s calculation has to factor in the competition. Phenomix’s drug is designed to block an enzyme called DPP4. Merck led the way in October 2006 with sitagliptin (Januvia), the first drug of this class approved in the U.S. By blocking DPP4, these drugs raise the levels of a peptide called GLP-1, which signals that food is in the body and tells the pancreas to make more insulin to control blood sugar. The market for these DPP4 blockers ought to be worth more than $10 billion a year, Shawver has said. The Merck drug alone generated $1.9 billion in worldwide sales last year. Novartis and Bristol-Myers Squibb also have FDA-approved drugs in the same class.

Laura Shawver

“We agree with the business decision on dutogliptin, as it always looked like a “me-too” opportunity to us,” said Thomas Russo, an analyst with Robert W. Baird, in a note to clients today. That said, Forest’s termination might send an unfriendly message to other biotech partners. It may “leave marks on the (Forest) business development track record,” Russo wrote.

No matter how you slice this story, it’s bad news for Phenomix. The company signed the partnership with Forest back in October 2008. The deal brought in $75 million in upfront cash to Phenomix and promised to generate as much as $340 million more in milestones over time, with Forest agreeing to equally share expenses and profits from the development of dutogliptin in the U.S. About a year later, Phenomix found another partner, Italy-based Chiesi Farmaceutici, in a deal that covers Europe and other territories around the world.

Today’s announcement from Phenomix is from just one …Next Page »

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Luke Timmerman wrote:

San Diego-based Ligand Pharmaceuticals (NASDAQ: LGND) said today it has earned a $6.5 million milestone payment from Switzerland-based Roche in connection with the advancement of a hepatitis C drug candidate into clinical trials. The product, RG7348, was the subject of a collaboration in 2008 between Roche and Metabasis Therapeutics, which Ligand acquired in January. Ligand will keep $2.3 million of the new milestone, pay about $2.7 million to former Metabasis shareholders who were issued a “contingent value right” to milestones from Roche, and use the rest to cover pre-existing contractual obligations.

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Luke Timmerman wrote:

Seattle Genetics, the developer of targeted cancer drugs in Bothell, WA, said today that Genentech, the U.S. unit of Roche, has agreed to pay $9.5 million to extend a licensing agreement between the two companies. Genentech has renewed its right to develop what are called “empowered antibodies” in which an antibody is made to zero in on a certain target on cells, and is linked to a more potent cell-killing agent. Genentech will pay the expenses of developing and marketing the drugs, while Seattle Genetics (NASDAQ: SGEN) will receive fees, milestone payments, and royalties on sales if they become FDA-approved products.

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Luke Timmerman wrote:

Sometimes a company only raises a small sum of money, but it attracts our attention because it involves interesting people and a potentially big idea. That was true last week when I profiled Avelas Biosciences, the latest startup from UCSD Nobel laureate Roger Tsien, and it’s true this week of another small company in San Diego—Amplyx Pharmaceuticals.

Amplyx appeared on our radar a couple weeks ago when it raised $1.5 million from Golden Seeds, a national angel group that invests in companies led by women, with additional support from Life Science Angels and Tech Coast Angels. The CEO is Elaine Heron, the former CEO of LabCyte, a sales and marketing veteran at Applied Biosystems, and a board member at Novato, CA-based BioMarin Pharmaceuticals (NASDAQ: BMRN). Another prominent businesswoman, Mary Lake Polan of Stanford University School of Medicine, and a former director of Wyeth, joined Amplyx as a board observer.

This company is still in its early days, but the idea is a big one—take an existing small molecule that has been shown to be active against a certain disease like HIV, and improve it in a critically important way. About half of all drugs on the market today have some kind of Achilles heel—maybe it isn’t absorbed well enough, doesn’t get wide enough distribution in various tissues, gets metabolized too quickly to be truly effective, or isn’t excreted in an ideal way. Amplyx, through a trick of chemistry, attaches a small organic linker to the existing drug to create a new molecule with whatever new property is desired. The new drug ought to be safe, and, importantly, it is a new entity that can be patented, Heron says.

Elaine Heron

None of this work has yet advanced into clinical trials, so we have no way of knowing whether this will work in human beings. But one way of reducing the immense risks of drug development is by starting with an established drug that has already cleared the FDA’s safety hurdles.

“I think this is going to work,” Heron says. “I’ve seen a lot of drug development platforms, and I’ve been selling to people in the space for a long time. This made sense to me.”

Of course, there are some men in key roles at this company, too. I spoke to Heron along with Amplyx’s co-founder and chief scientific officer Mitchell Mutz. The Amplyx technology has its origins with work done by Mutz and a pair of pathologists—Gerald Crabtree of Stanford University and Jason Gestwicki of the University of Michigan.

Amplyx’s lead project, as hinted above, is to create a better drug for HIV. There are some very effective protease inhibitor drugs on the market that have made HIV a chronic disease for many people in the U.S. But one of the drawbacks is that such drugs don’t last long enough in the bloodstream, and need to be taken in combination with a booster compound from Abbott Laboratories called ritonavir. That extra drug adds cost, complexity, and can cause some nausea.

If Amplyx has done its early chemistry correctly, it may be able to help patients ditch the ritonavir. The scientists have modified a protease inhibitor drug so that …Next Page »

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Luke Timmerman wrote:

Big cuts are happening at Mukilteo-based CombiMatrix (NASDAQ: CBMX). CEO Amit Kumar is stepping down, expenses are being cut, and the board is betting the future of the company on diagnostics, not on its traditional business of selling genetic analysis instruments to researchers.

The company’s statement today is vague, but the news is clearly bad for people in Mukilteo. Operating expenses are being cut by 40 to 60 percent relative to its cash spending rate of $10.6 million in 2009. While CombiMatrix isn’t saying specifically what that means for Mukilteo, it did say that its Irvine, CA-based operation is being shielded from the cuts because it is involved in developing its technology for diagnostics, which is the future of the company.

Kumar didn’t immediately respond to an e-mailed request for comment, but I’ll update this story if he responds with some clarification on what this means for the Mukilteo operation. I wrote a detailed feature last June on the company’s plan to transform into a cancer diagnostics player after it was essentially crushed by bigger competitors like Santa Clara, CA-based Affymetrix and San Diego-based Illumina, which also make DNA microarray tools that help researchers examine which genes are turned on or off in a biological sample.

By last August, CombiMatrix said it intended to hire an investment banker to evaluate options to “unlock shareholder value,” which might mean a sale of the company, or the signing of a partnership. At the time, it said it had a year’s worth of cash left on hand. Now it says it had $13.5 million left in the bank as of March 31.

“CombiMatrix is at a major inflection point in its development,” stated Dr. Amit Kumar, President and CEO of CombiMatrix Corporation. “We have developed and launched a number of valuable diagnostic testing services, and we believe the best use of shareholder capital is to focus on selling and increasing the utilization of those tests.

Kumar will stay as CEO until the company finds a replacement, which it hopes to do before the end of June, the company said. More specifics on the company’s plan will be available by the company’s second quarter conference call on May 11.

CombiMatrix said it had 69 employees companywide as of December 31, with roughly half, or 34 of them, in Irvine, CA, according to its annual report filed with the Securities and Exchange Commission.

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Luke Timmerman wrote:

NanoString Technologies, the Seattle-based maker of tools for genetic analysis, said today it has introduced a new product to analyze microRNA molecules on its nCounter instrument. MicroRNAs are tiny strings of RNA that don’t make genes, but are thought to regulate the activity of important biological processes. NanoString is rolling out the new application to coincide with the annual meeting of the American Association for Cancer Research in Washington D.C., where a number of enthused microRNA researchers are gathered today. NanoString primarily sells its instrument to researchers who want to look at how genes are dialled on or off in a sample, and it also foresees using the technology as a diagnostic tool.

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Luke Timmerman wrote:

Targeted Genetics, the Seattle-based developer of gene therapies, said today that three of the six members of its board of directors have stepped down. They departures aren’t because of a boardroom disagreement, but are intended to help save costs, Targeted said in a statement. Joseph Davie, Roger Hawley, and Nelson Levy have left the board, while Jeremy Curnock Cook, Michael Perry, and CEO Susan Robinson are keeping their board seats. The company has also made layoffs, and de-listed from the NASDAQ as part of its efforts to save cash.

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Luke Timmerman wrote:

Roger Tsien, the UC San Diego professor who won the 2008 Nobel Prize for chemistry, has spent his career creating ways to help scientists look inside living cells, using fluorescent molecular tags that only bind to certain structures. Now his vision is to apply some of what he’s learned to help surgeons remove tumors by creating vivid color differences between a tumor and healthy tissue, and a technique to make more potent “smart bomb” cancer drugs.

The company founded to develop these technologies from the Tsien lab at UCSD is called Avelas Biosciences (pronounced UH-vell-us). It got started about a year ago with an undisclosed amount of seed capital from San Diego-based Avalon Ventures. Tsien and Kinsella go way back to the mid-90s, when they joined forces to start Aurora Biosciences, the company that eventually sold for almost $600 million to Vertex Pharmaceuticals in 2001. I heard about the new vision for Avelas a couple weeks ago during a visit with Tsien in his office at UCSD.

The basic idea is to hit cancer cells in a new way. Avelas makes peptide substrate molecules that are sort of like Legos that can be attached to whatever the scientist wants—an MRI contrast agent, a fluorescent tag, or a potent cell-killing agent. The peptides can be designed to latch specifically onto enzymes that are active in tumors, and if there’s a tag attached, it can provide a vivid image for a surgeon who’s trying to completely cut out a tumor without hitting any nearby nerve tissue, Tsien says.

And that’s just the start of how this might be useful. Tsien, and the co-founders of Avelas, are thinking hard about using this new platform of peptide substrates to also make cancer drugs. Today’s antibody drugs are usually made to hit a specific receptor on the surface of cancer cells, fitting like a key into a lock. Tsien referred to this as a “1 to 1″ binding reaction, in which one drug molecule hits one target on cells. Instead, the Avelas peptides are aimed at hyperactive enzymes that make tumors go. The enzyme takes apart the peptide and its toxic cell-killing payload, and the enzyme repeats the process over and over again, creating an amplified anti-tumor effect, Tsien says.

Roger Tsien

If proven out in clinical trials, this notion could translate into lower doses, fewer side effects, and more efficient tumor-killing punch.

“This is a new targeting mechanism,” Tsien says. “I put it up there on the level with antibodies.”

This idea has been progressing in Tsien’s lab for the last six or seven years, and its commercial potential became clear about two years ago, he says. Once Kinsella became convinced it was time to spin this idea out into a company, two key people were brought aboard. Paul Finnegan, a former executive with Paramount BioCapital and Alexion Pharmaceuticals, was brought in as CEO because he had experience in both imaging and drug development. Tito Gonzalez, a former postdoc in Tsien’s lab and a veteran of Aurora and Vertex, signed on as vice president of R&D.

Like any company founded in a downturn, Avelas is under pressure to produce some commercially valuable results, sooner rather than later. So that’s why it is focusing first …Next Page »

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Luke Timmerman wrote:

Mirabilis Medica, the Bothell, WA-based developer of ultrasound technology to treat uterine fibroids, has raised $1 million in debt and options out of a financing round that could be worth $2 million, according to a regulatory filing. This company, which Xconomy profiled last June, said last year it had raised $11 million since inception from backers that include Charter Life Sciences, Arboretum Ventures, Split Rock Partners, and Dow Chemical.

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Luke Timmerman wrote:

The Sanford-Burnham Medical Research Institute said today it has promoted Kristina Vuori to president, from her previous position as executive vice president of scientific affairs. The San Diego-based research center said Vuori will continue to manage her cancer research laboratory and remain director of Sanford-Burnham’s National Cancer Institute-designated cancer center. John Reed will continue as CEO of the Sanford-Burnham Medical Research Institute.

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Luke Timmerman wrote:

Anadys Pharmaceuticals (NASDAQ: ANDS) is on the roller coaster again. The San Diego-based biotech company’s shares are up 17 percent this morning after it reported on another interim analysis of its hepatitis C clinical trial at a medical meeting in Europe.

Researchers found that 72 percent of patients who got Anadys’ experimental drug (ANA598) and standard therapies had undetectable amounts of the virus in their bloodstream after eight weeks, compared with 38 percent who did that well on a placebo in addition to the standard treatments. The drug was considered well-tolerated, researchers said. The findings were presented today at the European Association for the Study of the Liver meeting in Vienna, Austria.

Anadys has been rolling out the data from this trial in bits and pieces. Today’s slice of the data represents how patients did on a 400 milligram dose, while an earlier analysis showed how patients did on a 200 milligram dose. Investors balked at the earlier analysis of the 200 milligram dose, after Anadys saw an unusually high early response rate among patients in the placebo group. The whole clinical trial is designed to enroll 90 patients who are randomly assigned to get the low dose of the Anadys drug, a high dose, or a placebo. The main goal of the study is to show the drug is wiping out the virus for 12 weeks, although patients will also be followed longer to see if they have undetectable amounts of virus in the blood a full 24 weeks after they complete therapy, which is known as a “sustained viral response,” or a clinical cure.

Anadys shares climbed 18 percent to $3.08 at 10:46 am Eastern time today on heavy trading volume. The stock fell 12 percent back on February 25, after the company reported an earlier analysis which showed the high response rate among placebo patients.

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Luke Timmerman wrote:

Genocea Biosciences, the Cambridge, MA-based developer of vaccines, said today it has been granted $2.7 million to work on discovering a new malaria vaccine. The grant is from the U.S. Army Medical Research and Materiel Command as part of a research collaboration with the Naval Medical Research Center. Genocea will use its technology to find target antigens for a vaccine, while the Naval Medical Research Center will contribute their expertise in developing sub-unit vaccine formulations.

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Luke Timmerman wrote:

Cell Therapeutics (NASDAQ: CTIC), the Seattle-based biotech company, said it has cut 36 jobs to conserve cash. The move comes less than a week after the company’s application to sell a new drug for non-Hodgkin’s lymphoma was rejected by the FDA. The company says it now expects to spend about $60 million on operations this year, down 21 percent from its previous forecast.

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Luke Timmerman wrote:

Taligen Therapeutics, the Cambridge, MA-based developer of treatments for inflammatory and autoimmune disorders, said today it has added John Maraganore to its board of directors. Maraganore is the CEO of Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY) a leader in developing RNA interference treatments. Separately, Taligen said it added two members to its management team: Sven Ante (Bill) Lundberg as chief medical officer, and Karen Tubridy as vice president of clinical operations and regulatory affairs.

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Luke Timmerman wrote:

Dendreon (NASDAQ: DNDN), the Seattle-based developer of immune-stimulating therapies for cancer, said today it has hired Richard Ranieri as its new senior vice president for human resources starting on April 19. Ranieri was formerly the executive vice president of human resources at Sepracor, which was acquired last September by Dainippon Sumitomo for $2.6 billion. Ranieri takes the Dendreon job as the company is eagerly awaiting word by May 1 from the FDA on whether it can start selling its first product in the U.S., sipuleucel-T (Provenge). Dendreon raised more than $630 million from investors last year to support the launch, and is on a hiring binge, growing from 200 employees a year ago to 600 this year.

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Luke Timmerman wrote:

Genzyme (NASDAQ: GENZ]), the Cambridge, MA-based biotech giant, said today it has added Ralph Whitworth of Relational Investors in San Diego to its board, confirming a report from last night by the Wall Street Journal.

Whitworth, who oversees a $6 billion fund that is one of Genzyme’s largest shareholders, will now have inside access to push for change at Genzyme. He will chair a new Genzyme board committee on strategic planning and capital spending, and he will join committees on compensation and nominating and governance, which are responsible for CEO pay and CEO succession, Genzyme said. The company also agreed to nominate one more independent director with “substantial expertise” in the biotech industry, with the consent of Whitworth, Genzyme said. In return, Whitworth has agreed to support the company’s proposals and director nominees at the annual meeting scheduled for June 16, Genzyme said. The company’s board has now grown to 10 members with the addition of Whitworth. He will stand for election again at the annual meeting, along with all nine other directors.

“I am looking forward to working with the board to further our agenda for creating shareholder value at Genzyme,” Whitworth said in a company statement. “As long-term shareholders, we believe the company has great potential.”

This new deal with Whitworth is an update to a “mutual cooperation” agreement he reached with Genzyme back in January. Under that deal, Whitworth agreed to support the biotech’s slate of directors at the 2010 annual meeting on June 16, but if the company’s choices didn’t meet with Whitworth’s approval, Genzyme said it would name him to the board this fall. Whitworth shared his goals for changing things at Genzyme in this interview in January with Xconomy San Diego editor Bruce Bigelow.

The move to add Whitworth and one more director could make the going tougher for another activist investor, billionaire Carl Icahn, to exert his own influence over the direction of Genzyme. Icahn nominated four candidates to the Genzyme board back in February, including himself. The shareholder angst stems in large part from manufacturing troubles that hit Genzyme last June, which eroded sales of its big-selling enzyme replacement therapies imiglucerase (Cerezyme) and agalsidase (Fabrazyme). Genzyme’s stock fell 26 percent in 2009.

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