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Print Edition StoriesMonday, December 8, 2008
Four Ariad board members quit over differences with CEO Berger
By Marc Songini
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Four independent board members of the Cambridge-based oncology therapies company Ariad Pharmaceuticals Inc. have resigned, citing “vigorous disagreements” with the CEO and chairman, Harvey Berger, in the areas of corporate policy, professional ethics, and corporate governance.
The four board members tendered their resignations on Dec. 1, according to documents filed with the U.S. Securities and Exchange Commission. The four resigning directors are Michael Kishbauch, Burton Sobel, Sandford Smith, and Elizabeth H.S. Wyatt.
In their letter, addressed, “Dear Harvey,” the directors stated that “we have understood that our primary role as independent directors has been to promote the success of Ariad and to act in the best interests of all Ariad stockholders.” They raised the issue of Ariad’s recently completed buyout of its own subsidiary, Ariad Gene Therapeutics Inc. (AGTI) . At the time of the closing of the merger, it was planned that AGTI would cease to exist.
The directors claimed they had worked diligently to ensure there would be a “level playing field” for all Ariad stockholders around the AGTI transaction. However, they accused Berger of a “clear conflict of interest.” They went on: “Unfortunately, the recent completion of the AGTI merger transaction has obviously been the trigger for your grossly inappropriate behavior in your dealings with the four independent directors who approved the AGTI merger despite your unjustified objections.”
They accused him of “self-interested, combative and obstructionist actions” around the implementation of the AGTI merger, the replacement of the company’s general counsel, and the mishandling of the AGTI appraisal litigation. After listing a litany of other issues, they concluded that the four of them had “irreconcilable differences” with Berger and the four other directors, the present and future policies of Ariad, and Berger’s tenure as CEO and chairman.
“In our many decades of public company experience, we have never before witnessed the egregious misbehavior in which you have engaged during recent weeks,” they stated. “We cannot continue to serve on Ariad’s board under these circumstances.”
They did, nevertheless, note that “the scientific personnel and programs at Ariad are first-rate and we continue to hope that they will be commercially successful.”
Ariad company spokeswoman Maria Cantor acknowledged this was a unique situation. “It’s big and unusual for a company to have resignations from a board like this,” she said. “We feel it’s unfortunate, it’s disappointing, and it’s unusual. We recognize it, and that it’s a matter of concern for those who see these filings.” However, she said this situation would not impact the company’s growth or clinical progress. “All those areas remain sound and stable. This is a matter of personal differences of opinion between the chairman and the four other leaving directors.”
She also said this wouldn’t have an impact on Ariad or its work to advance its products. Moreover, she said at that one or two new members would probably be selected in the “near term.”
In October, Ariad announced the addition of two directors: Massimo Radaelli, president and CEO of pharmaceutical firm Dompé International SA, and Wayne Wilson, an independent business advisor and certified public accountant who named chairman of the audit committee. Those two plus three other directors, Berger, CFO Jay LaMarche and Athanase Lavidas, chairman and CEO of the Lavipharm Group, continue to be listed as directors on Ariad’s website.
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