How is Ken Galbraith leading the turnaround at Zymeworks???Why Ken Galbraith?
Zymeworks was owned by institutions at 82% before the recent financing, 18% by retail.
After the dilution, 62% institutions, 35% retail. These latest numbers clearly show that institutions stayed out of the latest round of financing.
Galbraith didn’t work for the Company or its shareholders during his last stint as CEO from April 2019 to Nov 2020 when he was top dog at Liminal Biosciences; he worked for himself and his new owner, Thomvest/Structured Alpha LP (SALP).
Just like he’s doing at Zymeworks, directors and managers were refreshed to his liking when he arrived at Liminal, and he also made big changes in effort to “save” the company. What he did for a year and a half before he left Liminal for “personal reasons” was to put pretty much all of the company’s products on hold, get rid of Liminal’s only profitable division, and buy a company that Liminal clearly didn’t need in Fairhaven Pharmaceutical. Liminal had a few commodity products near the goal line, but they decided instead to remove them from their pipeline or give them away (that’s right, not sell them, give them away). They also put their star product back on a never ending phase 1 trial, when it had already completed a phase two trial back in 2017, claiming it was a weak phase 2.
The interesting part about Fairhaven Pharmaceutical , the company Ken bought through Liminal while the CEO of Liminal, is that he was the CEO of that company until April 2019, when he became CEO of Liminal. Ken was director of Liminal (formerly Prometic) since Aug 2016. Through 5 corners Capital, for which Ken was Managing director, he invested in Fairhaven capital as a venture partner through Genesys Capital. Anyway, if it seems complicated for you, it is for me too. But when this fact came to light shortly after the purchase of Fairhaven by Liminal, Ken quit citing personal reasons. He immediately reverted (same month) to being a managing director at five corners capital. Whatever the personal reasons were, he was still ok to perform his duties at five corners, just not a Liminal…
This being said, why was he chosen to run the turnaround at Zymeworks when he failed so miserably to do so at Liminal? Was the decision to bring him back influenced by Neil Klompas who is CFO and COO of Zymeworks? We have to keep in mind that those two worked together at Zymeworks before, from 2009 to 2013, when Neil was CFO and Galbraith a director of Zymeworks. While CEO of Liminal, Ken brought Mr. Klompas to Liminal as a director in 2019, where he still serves today. Why would Ken go back to Zymeworks unless it was because of Neil Klompas? Seriously, is he the only one ine the world that can lead a failed turnaround?
One possible scenario is that Ken is able to get things done, for himself and institutions. He proved it at Liminal. If institutions want out, they need retail to do so, otherwise they’ll have to eat each other out and that’s not cool. So they do this IPO, one can imagine that if they succeed, they’ll manage to get the markets excited with retail buying the stock on the way up, while institutions are getting out. If history repeats, the small retail shareholders will be left holding the bag at the end, and Ken will move on to a different job, where he can do the same all over again for himself, nice salary and perks, and his employers, the institutional investors.
Of course this is all speculation, but it’s certainly a scenario that’s worth keeping in the back of our minds with his track record. Ken has such an impressive track record of having been everywhere, but I’m not sure how impressive it is for realizing anything.
Ken could be this saviour that Zymeworks expects him to be. Liminal had everything on a platter for him and he still managed to fail it. Zymeworks shareholders beware. Time will tell if Galbraith is your saviour or not.
We are watching you Ken…