Major Shareholder Wants Inquiry Into Northwest Biotherapeutics Allegations
30 11월 2015 - 11:50AM
Dow Jones News
LONDON—A major shareholder is urging biotechnology firm
Northwest Biotherapeutics Inc. to hold an inquiry into allegations
about the governance of the company by Chairman and Chief Executive
Linda Powers.
Neil Woodford, a U.K. fund manager well-known for investing in
the biotech industry, has sent a letter to the board of the
Bethesda, Md.-based company to recommend it establish an
independent special committee to investigate the claims. The letter
was contained in a filing with the U.S. Securities and Exchange
Commission.
He proposed the board appoint Elliott Leary, a former special
agent of the Federal Bureau of Investigation who now conducts
investigations for the global risk-management firm Freeh Group
International Solutions LLC, as a nonexecutive director.
If appointed, Mr. Leary then would convene a special committee
of nonexecutive directors to investigate the allegations, which
were made largely by an equities research group, and which raise
questions about what the research group says are the company's
financial dealings with vehicles related to Ms. Powers.
The Woodford letter, which was dated on Tuesday, concluded: "In
this way, we and other investors can then be satisfied that the
company will have the benefit of a fully independent
investigation."
Ms. Powers in interviews on Friday and Saturday with The Wall
Street Journal denied there have been any financial irregularities
between Northwest and entities related to her. She termed the
allegations as "baloney." She said payments for services to such
entities had been cleared by the Northwest board, independently
audited and filed where necessary with regulators.
She said Northwest had repeatedly been subjected to efforts by
analysts and others "to throw mud against the wall at us." She said
she "shared the view" of Mr. Woodford that there should be an
investigation and "wanted to see this stuff put to rest once and
for all."
Phase Five said its report was "well referenced to publicly
available records and based on facts that can be verified," in
comments to The Wall Street Journal.
Mr. Woodford's letter said Northwest Biotherapeutics' board had
earlier this month agreed in principle to his proposal and that Mr.
Leary had met with the board last week. Company officials confirmed
the meeting took place.
Ms. Powers said the company planned to appoint a new board
member and launch an independent review "on a rapid basis and soon"
and that while the search for a nonexecutive director is focusing
on Mr. Leary, the process hasn't been completed. Phase Five
Research, which carries out analysis of health-care and biotech
companies, last month published a scathing report raising questions
about Northwest's technology in development and accusing Ms.
Powers, of using the company "as her personal checking account to
financially support her investment" in other private ventures. In
its report, Phase Five noted that it and its employees may take
long or short positions in companies they cover. In a repost of the
report on the Seeking Alpha website, Phase Five disclosed it held a
short position in Northwest. The identity of the research group's
analysts wasn't cited.
Phase Five claimed that since 2004 around $310 million in cash,
shares, warrants, options and other benefits had been transferred
from Northwest to the Toucan Group, an entity controlled by Ms.
Powers and her husband.
Ms. Power said Northwest didn't know how Phase Five came up with
the $310 million figure. Les Goldman, who heads Northwest's
business development, said any payments to a company related to Ms.
Power would have been made to a Toucan portfolio firm Cognate
BioServices in return for further development and manufacture of
Northwest's cancer treatment for use in clinical trials involving
hundreds of patients.
The two executives pointed out that a large percentage of
payments to Cognate would have been in unregistered and
non-tradable locked-up shares.
The activist move is an unusual one for Mr. Woodford, who
typically adopts a passive stance. He made his first investment—$25
million—in the company last year. He has since invested an
additional $70 million into the company across two subsequent
fundraisings, and currently holds a 28% stake.
Of that total, he agreed to his most-recent investment, of $30
million, just days before Phase Five Research made its allegations.
Mr. Woodford said in the letter that he "only became aware of these
allegations after the completion of our recent investment" in the
company. Mr. Woodford is one of only a small number of life-science
specialists investors in the U.K., and his backing is highly sought
by biotech companies.
Northwest Biotherapeutics is developing a treatment that
involves altering a patient's own immune cells to make them more
effective at fighting tumors. Its most advanced treatment is for
brain cancer, but it is also conducting early-stage research in
ovarian cancer.The company says it is investigating the potential
of the approach in a wide range of solid cancer tumors.
Write to Denise Roland at Denise.Roland@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 29, 2015 21:35 ET (02:35 GMT)
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