The board that fired Arcturus Therapeutics co-founder and CEO Joseph E. Payne earlier this year unleashed a new broadside this week in the ongoing battle for control of the San Diego-based RNA drug developer.
In a lawsuit filed Tuesday (see below) and in an open letter to shareholders issued Wednesday, the Arcturus (NASDAQ: ARCT) board says a pattern of alleged misconduct, deceit, and failed leadership by Payne led to his termination on January 25. The allegations include attempting to give Arcturus assets to a friend’s biotech company for free, and operating a side business on company time.
Payne, who remains the company’s largest shareholder with a 13.7 percent stake, told Xconomy Wednesday afternoon, “You notice these guys have a pattern of disparagement,” but otherwise declined to comment. The ex-CEO said he wanted to consult with his lawyers before saying anything more.
The Arcturus lawsuit, filed against Payne in San Diego Superior Court, comes in advance of a proxy battle that is expected to play out at a shareholders meeting set for May 7 in San Diego. Meanwhile, Payne also has filed a lawsuit against Arcturus, but declined to provide details.
Shareholders of record (as of April 9) will be asked to vote for two competing sets of proposals. One from Arcturus is asking shareholders to immediately remove Payne from the company’s board of directors—in effect endorsing the incumbent board and its moves against Payne. The ex-CEO, meanwhile, is asking shareholders to immediately remove incumbent directors Stuart Collinson, Craig Willett, Daniel Geffken, and David Shapiro, and elect in their place Peter Farrell (the ResMed founder and former CEO), Magda Marquet (the Althea Technologies co-founder), Andrew Sassine, and James Barlow.
Payne and Padmanabh “Pad” Chivukula, who was Arcturus’s chief scientific officer and COO, founded Arcturus in 2013 to advance a new approach to the development of RNA drugs for infectious disease, cystic fibrosis, nonalcoholic steatohepatitis (NASH), and rare liver diseases.
According to the board’s lawsuit, Payne “demonstrated a general lack of care and ignorance of his responsibilities” throughout his tenure as Arcturus president and CEO.
But the real hostilities erupted last fall, as the privately held biotech, which had just a handful of employees, reached a reverse merger agreement with … Next Page »