Optimer Board Ousts CEO, Brings Back Former Pfizer CEO McKinnell
The board of Optimer Pharmaceuticals ousted the company’s co-founder and chairman and fired a couple of executives last spring over conflicts of interest stemming from an affiliated company in Taiwan.
Apparently, the trouble didn’t end there.
Jersey City, NJ and San Diego-based Optimer (NASDAQ: OPTR) said today in a statement that CEO Pedro Lichtinger agreed to resign from all his roles at the company—president, CEO, and member of the board. The Optimer board has replaced Lichtinger with Henry McKinnell, the former CEO of Pfizer (NYSE: PFE). McKinnell, who left the giant drugmaker with a controversial golden parachute from Pfizer in 2006, will be in charge of Optimer as it seeks to “explore a full range of strategic alternatives,” through a process guided by JP Morgan and Centerview Partners.
That’s not the only change to management and oversight at Optimer. The board also said that Kurt Hartmann agreed to resign as the company’s general counsel and chief compliance officer, and he will be replaced by Meredith Schaum. The Board of Directors also appointed Mark Auerbach, as lead independent director. Auerbach previously served from 1993 to 2005 as chief financial officer of Central Lewmar, a national fine paper distributor, according to his company biography.
Optimer’s board didn’t specifically say in today’s statement what prompted the latest dismissals. Last April, Optimer’s board fired chief financial officer John Prunty and Youe-Kong Shue, the vice president for clinical development who also served as the CEO of Optimer Biotechnology Inc. (OBI), an affiliated Taiwanese company. Optimer said at the time that the executives were terminated because of their failure “to follow proper procedures when they became aware of the issues related to the issuance of the OBI shares to Dr. [Michael] Chang,” the co-founder of Optimer Pharmaceuticals.
Almost a year later, here’s what Optimer’s board had to say about the issue:
“The Independent Directors recommended to the Board that management changes were appropriate following their review of prior compliance, record keeping and conflict-of-interest issues observed during the review, including issues arising from the conduct of Optimer personnel who were the subject of the changes in management and leadership announced in April 2012. The previously disclosed investigations of these issues by the relevant U.S. authorities are ongoing and the Company continues to cooperate with those authorities.”
Eun Yang, an analyst with Jefferies & Co. in New York who rates the company a “buy,” suspected there may be more to the story than just bad compliance and record-keeping.
“This is all surprising,” Yang wrote in a note to clients today. “Looking for strategic alternatives is positive as being a single-product company is always challenging. Removing CEO Pedro Lichtinger over prior compliance, record keeping and conflict-of-interest issues arising from the conduct of its former employees is unexpected, particularly [sic] we thought that Lichtinger took swift action when the misconduct was discovered.” She added: “We surmise that his removal might also stem from the board’s dissatisfaction with Dificid commercial launch in the U.S.” Yang pointed out that Optimer’s stock fell 25 percent last year, when the NASDAQ Biotech Index climbed 31 percent.
The turmoil at Optimer comes shortly after the company won FDA approval in May 2011 for its first marketed product, a new antibiotic for the dangerous C. difficile bacteria found in hospitals. The drug, fidaxomicin (Dificid) showed in clinical trials that it was a powerful alternative to vancomycin, and that it could reduce recurrences that are sometimes deadly and require expensive readmissions to hospitals. Optimer struck partnerships with Lexington, MA-based Cubist Pharmaceuticals and Japan-based Astellas Pharma to help it market the drug around the world.
The drug has gotten off to a slow start. Optimer said it generated $21.3 million in fourth quarter sales and $74.4 million last year—its first full year on the market. Yang said today she still foresees the drug generating as much as $300 million in peak U.S. annual sales, and as much as $120 million in peak sales outside the U.S.
Optimer’s board also installed a shareholder rights plan that’s supposed to stop someone from making a hostile takeover bid for the company while it’s doing a strategic review, essentially preying on it in a moment of weakness. Shares of Optimer climbed 12 percent to $12.01 at about 2 pm Eastern time, presumably on speculation that the company will end up getting acquired.