It's deal time at Medarex
Agreements with 7 in options probe
Friday, January 05, 2007
BY BILL MOONEY
PRINCETON TOWNSHIP -- In an attempt to end a troublesome chapter in its history, Biotech company Medarex Inc. reported it has reached agreements with seven senior executives and board members concerning its probe of backdating stock options.
In a filing late last week with the Securities and Exchange Commis sion, Medarex reported agreements with seven officers: Irwin Lerner, board chairman, interim president and chief executive officer; Christian Schade, senior vice president for Finance and chief financial officer; W. Bradford Middlekauff, senior vice president and general counsel; Nils Lonberg, senior vice president and scientific director; Ronald A. Pepin, senior vice president of Business Development; and board members Charles R. Schaller and Julius A. Vida.
The SEC and the U.S. Attor ney's office in New Jersey both requested information last year re garding Medarex's stock option practices, and an outside director of the company was conducting an in-house investigation. The filings last week are connected with that in-house probe.
The practice under review concerns when an option to purchase stock is exercised but the price is backdated to a date when it was lower. The practice is not illegal but must be accurately reflected in company filings.
Medarex reported to the SEC that the company's "Special Investigations Committee found that prior to the enactment of the Sar banes-Oxley Act of 2002, Medarex had a practice in many instances of dating its stock options grants and restricted stock grants as of dates on which the stock price was relatively low, without disclosing the selection in its public filings and without taking a compensation charge."
According to the company's filing with the SEC, the officers have agreed to reprice their options to reflect fair market value if and when they are exercised. According to Medarex, in three cases -- those of Middlekauff, Schaller and Vida -- options had been exercised and they either are repaying or already have repaid to the company any money owed.
For example, in the case of Middlekauff, according to the filing, he had exercised his option to purchase 100,000 shares at $6.37 per share. According to the company's filing with the SEC, it determined that a corrected exercise price for those shares should be $8.11. The difference, $174,000, has been re paid by Middlekauff, according to Medarex.
In the case of Schaller, according to Medarex, he purchased 120,000 shares for $2.25 per share, when a corrected per share price should be $3.205. Schaller has agreed to pay the difference, $114,600, according to the filing.
And in the case of Vida, he purchased 78,000 shares at $2.25 per share when a corrected per share price should have been $3.205, and in another instance he purchased 5,000 shares at $2 per share when a corrected per share price should have been $2.84, according to Me darex. He has repaid the $78,690 that was owed, according to the filing with the SEC.
Attempts to seek comment from company officers were for warded to the company's public information office. Medarex spokeswoman Jean Mantuano said the company would have little comment beyond the SEC filings. "We are working on restatements," she said, "so nothing has changed there."
The company had announced in August that it might have to revise financial statements from 2000 through the first quarter of this year.
In addition, the company had been warned last year by Nasdaq that it could face delisting because quarterly filings were delayed due to the internal investigation. Such delays violate listing requirements.
Medarex, (NASDAQ: MEDX), which develops antibody therapies, has declined 48 cents in the past week since its SEC filing, going from $14.95 to $14.47 yesterday.
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