AVI BioPharma's CEO resigns
Investor's revolt - Denis Burger was targeted by a shareholder who formed a legal trust to oust him
Thursday, March 29, 2007
JOE ROJAS-BURKE
The Oregonian
Dismayed by the management of AVI BioPharma Inc., a lone shareholder began an unlikely campaign five months ago to oust the Portland biotech firm's top executive.
On Wednesday, Chairman and Chief Executive Officer Denis Burger resigned, and the company named an interim chief executive to serve during the search for a permanent replacement.
Richard Macary, a New York-based stock analyst and venture capitalist who started the grass-roots revolt, said individual shareholders gained power to sway the board of directors by banding together in a new kind of entity.
In October, Macary formed a legal trust under the state laws of Delaware to represent people who'd bought stock in the company. Macary solicited donations by mail and via a Web site, retained a law firm and prepared for battle.
"There was really only one way to create a voice to unite shareholders," Macary said.
Macary's so-called shareholder's advocacy trust may be the newest and rarest -- and still unproven -- tactic in a resurgence of investor activism since the tech boom ended in corporate scandals and imploded investments.
He declined to say how many shareholders signed on or how much money they contributed, but he said the trust represents the holders of about 20 percent of outstanding shares.
James McRitchie, editor of the online newsletter Corporate Governance in Elk Grove, Calif., said the shareholder trust is a new and interesting model that could prove beneficial to individual investors.
"Anything that helps shareholders band together, especially individual investors, is potentially a good thing," McRitchie said. The tactic may work best, he said, for small companies where individuals hold most shares -- and where management has become a glaring issue.
But McRitchie said he still has doubts about the willingness of shareholders to donate money and empower a trust to act effectively on their behalf.
AVI BioPharma officials gave no reason for Burger's resignation. Board members could not be reached Wednesday to comment on the influence of the shareholder's trust.
Burger on Wednesday told Bloomberg News that he was asked to step down, and the board is seeking a CEO more experienced in pharmaceutical development. He predicted that his replacement "will look like a star because the company is well set up."
Since its inception in 1980, AVI BioPharma has spent more than $200 million but has yet to bring any of the company's technologies or drug candidates to market. AVI has developed synthetic polymers that block the function of a targeted gene or virus by binding to a specific gene sequence. The company has advanced several potential treatments into human clinical trials, including drugs to prevent clogging of heart arteries and fight hepatitis C infection.
Macary said AVI BioPharma's shares have lagged far behind the Nasdaq and AMEX Biotech indexes since the company went public in 1997. He faults management for the lack of institutional shareholders and lack of coverage by Wall Street analysts. He questions the company's repeated rounds of private placement financing that have diluted the value of publicly traded shares.
The company said board member K. Michael Forrest would serve as interim chief executive officer during the search for a permanent CEO. Board member Jack L. Bowman was named chairman.
Bowman has previously headed the biotechnology company NeoRx Corp. He is a director of Celgene Corp., another biotech. Forrest ran the biopharmaceutical company Cellegy Pharmaceuticals Inc. from 1996 to 2005. He also has held the top job at privately held Mercator Genetics and Transkaryotic Therapies Inc. He is a director of INEX Pharmaceuticals. |
