anyone here follow PDL? pipeline looks encouraging and the steady royalty stream should keep funding it for a while
PDL BioPharma CEO Resigns Despite Probe Clearance
By Peter Loftus
Press Date: Tuesday, August 21, 2007
Dow Jones Newswires
PDL BioPharma Inc. (PDLI) said Monday its chief executive was stepping down even though a company probe cleared him of wrongdoing that was alleged by an activist shareholder.
Shares of the Fremont, Calif., drug company rose $1.27, or 6%, to $22.43 in recent trading. PDL also said it's continuing a strategic review and is being assisted by Merrill Lynch & Co. (MER).
PDL said Mark McDade would step down as CEO and a director by the end of 2007, citing "the personal toll created by the unsubstantiated rumors and related investigation." PDL's board will start a search for McDade's replacement.
PDL said a three-month internal probe "found no credible evidence of improper personal conduct or breach of fiduciary duty by McDade to corroborate the various allegations investigated."
Many of the charges were leveled by Third Point LLC, a New York hedge fund that owns about 10% of PDL shares. Third Point's pugnacious chief, Daniel Loeb, has pressed PDL for much of the year to get rid of McDade, saying he has mismanaged the company and engaged in some questionable behavior. In barbed letters filed with the U.S. Securities and Exchange Commission, Loeb has accused McDade of planning to move PDL's Bay Area headquarters in order to shorten his commute and said McDade once dismissed "out of hand" a takeover offer for PDL by a large pharmaceutical company.
Loeb and a company co-founder have expressed frustration over PDL's stock price performance. Last year, the shares fell more than 40% on concerns about spending, delays in development of new drugs, and dissatisfaction with a 2005 acquisition. The stock received a bounce after Loeb began his campaign for change.
PDL has defended McDade, saying the company had outgrown its older headquarters and that McDade had always met his fiduciary duties.
PDL said Monday that its internal probe found "there was no credible evidence of a conflict of interest relating to an alleged relationship between McDade and another officer of the company, that there was no breach of a fiduciary duty by McDade with respect to an alleged offer or purported indication of serious interest from a pharmaceutical company to acquire PDL, and that McDade did not improperly withhold information from the board with respect to this alleged offer or indication of interest."
PDL also said the probe concluded that no such takeover offer was ever made, at any price, by the large pharmaceutical company, which PDL didn't name.
"The allegations and public innuendo have been damaging to PDL, to PDL board members and employees, and to me personally," McDade said in a PDL press release. "This extensive independent investigation should put these allegations to rest. However, given the personal and professional toll, I have decided to step down as CEO of PDL and as a member of the board by the end of this year."
Loeb said in an interview Monday he was pleased that McDade was departing and that he looked forward to the outcome of the strategic review. He said the board's findings exonerating McDade were irrelevant. "What is relevant is mismanagement, and they didn't exonerate him of mismanagement," Loeb said. A PDL spokeswoman said "the investigation found no evidence to corroborate the allegations made about Mr. McDade. We don't have any comment on further allegations that may be made beyond those investigated."
To assist during the transition until a new CEO is named, Chairman L. Patrick Gage will assume the role of executive chairman.
PDL's primary asset is a group of biotechnology patents that are licensed to other drug manufacturers, including Genentech Inc. (DNA) and Wyeth (WYE). PDL also is developing experimental drugs of its own
