ON STATE STREET: Executive fends off
questions
Wednesday, December 10, 1997
By Beth Healy
Dr. Lindsay Rosenwald wanted to put an end to a nasty mix-up last week.
People were mistaking his Manhattan investment banking firm, Paramount
Capital Inc., for another company featured in some unflattering news stories
about misdeeds in the securities business.
As the phones rang off the hook, Rosenwald's staff fired off a press release,
insisting Paramount and its affiliates ''are in no way associated'' with
Paramount Capital Management Inc., which is facing a fraud complaint by the
Securities and Exchange Commission.
Anyone might be touchy, faced with that scenario.
But Rosenwald, a wealthy biotech financier and chairman of beleaguered
Interneuron Pharmaceuticals Inc., had reason to be particularly sensitive.
His father-in-law's investment firm, D.H. Blair & Co., also appeared in some of
those stories - and took out a newspaper ad the next day denying links
between Blair and any ''unlawful elements.''
cw-5Rosenwald, 42, used to be a senior investment banker with D.H. Blair.
The New York firm is Interneuron's biggest investor, with 26.3 percent of its
stock. And Blair has had some major run-ins with securities regulators
recently (see story at left).
Rosenwald did not respond to interview requests.
He spends 90 percent of his time at Paramount, a spokesman says. A
Temple University-educated doctor who first studied finance at Penn State, he
sits on the boards of nine publicly traded biotech or drug companies,
according to Interneuron's 1997 proxy statement.
As if that's not enough to keep him busy, Interneuron is fighting for its future.
The Lexington drug maker recently had to pull its only money-making product,
the Redux diet pill, off the shelf, after some patients who took the drug
suffered heart damage.
The value of Rosenwald's 6.3-percent stake in Interneuron plunged about $17
million, to $30.5 million, in the two weeks after Redux was recalled.
Shares fell from $18.56 on Sept. 12 (the last trading day before Redux was
withdrawn) to a low of $9.94 on Nov. 17. They've since inched back to $11.50.
Such is the nature of speculative stocks - the kind of stocks D.H. Blair takes
public. The firm calls its offerings ''public venture capital,'' helping small firms
sell shares to the public.
Blair took Interneuron public in 1990 but no longer makes a market in the
stock.
''That's the last time they were involved in any public financing for us,'' says
Bill Boni, Interneuron's spokesman. Now firms like Montgomery Securities
and Merrill Lynch & Co. deal in the stock.
Without Redux, Interneuron has no product to sell and millions in losses. It's
hoping three new drugs will revive its prospects - and its stock. Recently, the
company rejiggered an option deal that fixes a strike price of $14.50 on its
shares by year-end.
Top executives and other employees got stock grants that start vesting next
month, incentives to keep them aboard while Redux is in limbo and the new
drugs await approval.
Ordinary investors will get no such salve. |
