Some ThoughtsIt has been almost 6 weeks since Dr. Mark Day took over as CEO. From a scientific perspective, it appears that he has the credentials to lead the organization. This should give us some comfort that TranscendPep is indeed a viable BBB vector. Although human trials have not validated this, it appears that Dr. Day believes TranscendPep has a reasonable chance of success by the mere fact that he has joined the organization.
Every investor in biOasis, should ask themselves the following questions:
- What is the current SP of .73 telling me?
- What does it mean that we have experienced a 28% drop in SP since the time of hiring Dr. Day?
- What does it mean that we traded as high as $2.05 in September 2016 and dropped to .73 today – an erosion of 64% in market cap?
- In short - Is the market lying to me?
Although Dr. Day seems to have the right credentials from a technical standpoint, it is yet to be determined if he has the qualifications as a CEO. A CEO will need to instill confidence in the investor, such that:
“returning value to the shareholder is of the highest priority”. Most recently, I have been following the actions of the new Alexion CEO, Ludwig Hantson. The company has been floundering for some time. In the past 2 years, it has suffered a 50% loss in marketcap. Didn't take him long to act. Some of his first actions, were to “clean house” in the executive suite:
- Chief Commercial Officer Carsten Thiel will resign effective June 1. Brian Goff has been hired to succeed him. His joins the firm from Neurovance where he was COO.
- CFO Dave Anderson will resign at the end of August, A search for a replacement is underway.
- EVP, Head of R&D Martin Mackay will retire at year-end. A search is underway for a successor.
- EVP, Chief Human Resources Officer Clare Carmichael will resign effective June. A search is in process for a replacement.
In one of his first presentations, Hantson did not mince words. He told the conference that he wasn’t excited about much of anything in their pipeline (except ALXN1210) & that he didn’t believe they were getting “bang for the buck” for the 22% of sales revenue spent on R&D. He went further to say that Kanuma was a disappointment (remember Synageva?) & required further investigation. He also addressed the area of commitment to compliance as it relates to some of the allegations swirling around the company of improper sales practices.
All of this was within the context of this comment by Hantson:
“My highest priority is to significantly increase shareholder value by developing and implementing a strategic business plan that will further leverage our strength. You can expect to hear more on my strategy on the second quarter earnings call in July”. Now since Hantson’s actions/commentary, the Alexion share price has dropped some 20%, but the reasons have been sited - it’s out in the open.
This is what a CEO does when entering a difficult situation. Dr. Day, do you have what it takes to make the appropriate changes in the organization to increase shareholder value? Is this your highest priority? Is the highest priority of the BOD to increase shareholder value? We’ve spent almost the entire option pool (20% of the shares) on the BOD. Did the shareholders receive value from our current BOD? To aid in the transition, I can see why we have the position of Executive chairman. Is this position going to be a permanent position? These questions are by no means exhaustive, as they should be applied to all areas of the organization (licensing, internal programs, scientists, consultants, IR etc).
Dr. Day, these are all very difficult issues to deal with - but you occupy the position of CEO. Address the issues confronting the company honestly & thoroughly and I believe the shareholders will support you. Dr. Day – are you our new CEO?