The biotech company CytoDyn calls the nomination notice of the activist board invalid – sources
By Svea Herbst-Bayliss
BOSTON, Aug. 2 (Reuters) – Biotech company CytoDyn, working on coronavirus treatment, is pushing against activists trying to take control of its board of directors by voiding their director nominations, a seldom seen development when fighting for board seats, two people familiar with the matter said.
The Vancouver, Washington-based company informed the activist group that its notice announcing it would nominate five directors was in breach of its charter. The letter also contained more than 50 errors, ranging from errors in standard nominees’ questionnaires to improper disclosure of the group’s funding.
In a July 30 letter to the activists, viewed by Reuters, the company said the group did not have the right to nominate candidates for directors at the 2021 annual meeting because it failed to meet the requirements of the statutes .
On June 30, the activists, led by Paul Rosenbaum, wrote to the company that they intend to nominate five directors to the company’s six-member board. The company received the letter on July 1st.
The company’s nomination period ended on July 2nd and its annual general meeting will be on October 28th.
A spokesman for the activists was initially not available for comment. A company representative declined to comment.
The group, which owns approximately 1% of the company’s shares, argued that management and the board of directors mishandled the development of Leronlimab, an investigational monoclonal antibody.
The group running the proxy competition is a subgroup of a larger group that filed a motion with the regulator in May to “discuss the company’s underperformance” and its “lack of trust in management.”
The $ 1.06 billion company announced last week that it had received inquiries from the Securities and Exchange Commission and the Department of Justice for documents related to Leronlimab.
The story goes on
The company said there were many errors in the activists’ announcement letter. For example, Bruce Patterson, one of the nominees for the group’s board of directors, suggested in May that CytoDyn buy IncellDx, Inc., where he serves as CEO, but the letter of notification did not disclose the offer or how Patterson would have personally benefited from it if the deal hadn’t been turned down by CytoDyn.
CytoDyn’s share price has fallen 68.47% since January, closing at $ 1.69 on Friday.
Voiding a nomination notice is rare in corporate board battles, but it happened in 2018 when financial services firm HomeStreet, Inc. used the method against Roaring Blue Lion Capital.
(Reporting by Svea Herbst-Bayliss Editing by Chris Reese)