Off With Their Heads! BioSpace's Favorite CEOs Who Got The Axe In 2014
October 31, 2014
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
It’s Halloween at last! In the final installment of BioSpace’s spooky-themed features, we decided to go right to the top—to the C-level suite, in fact. This is our look at some of the biotech companies that said “Off with their heads!” to their executives this year, often in spectacular (and humiliating) fashion. This year, they said there will be blood, and they were right, as heads rolled in boardrooms across biotech.
1. Retrophin—Martin Shkreli
Retrophin has remained tight-lipped about why Shkreli was parting ways with the company, saying only that they wished him well. But people familiar with the company have since told news outlets that Shkreli, who is a founder and managing partner of hedge fund MSMB Capital Management, has also been involved in a criminal investigation into harassing a former employee. In a January 2014 affidavit for the case, the former employee, Timothy Pierotti, quoted from a letter sent to his wife by Shkreli, in which the then-CEO said: “I hope to see you and your four children homeless and will do whatever I can to assure this.”
As a former short seller trader, Shkreli was likely well aware of what or was not strictly legal when dealing with company stock. The violations will now likely catch the eye of regulators with the U.S. Securities and Exchange Commission, which levies heavy fines and penalties on companies found to be in violation of securities laws.
Whether or not Retrophin will be stuck paying the bill remains to be seen.
2. Sanofi—Christopher Viehbacher
All the begging in the world apparently couldn’t help him, either: In response to rumors of his possible firing, Viehbacher wrote a letter to the board which was published in the French newspaper Les Echos. In it, Viehbacher cited his successes and said, “The inevitable media coverage and change of leadership risks organizational distraction at a critical juncture in the Group’s development. This would not be in the interests of shareholders.”
During his tenure, Viehbacher oversaw the acquisition of Genzyme , with shares more than doubling in those six years. At a directors’ meeting held Wednesday October 29, Sanofi’s Board of Directors unanimously voted to oust Viehbacher. In response, he resigned his position. In a press release, the company indicated it would “pursue its development with a management aligning the teams, harnessing talents and focusing on execution with a close and confident cooperation with the Board.”
Serge Weinberg will step up to act as CEO on an interim basis while remaining as chair. Weinberg was formerly the head of Gucci parent company PPR.
Viehbacher was the first non-French CEO of Sanofi. Several months ago he moved to Boston for family reasons, which drew raised eyebrows among the French Board of Directors. It was estimated that he only spent a third of his time in France, with the rest in the U.S. or traveling internationally. He also may have crossed swords with the wrong French politicos: Viehbacher’s staffing put him toe-to-toe with France’s former Minister of Industrial Renewal, Arnaud Montebourg—who is rumored to be planning a run for president of France in 2017.
3. Sarepta—Arthur Krieg
Rumors about why Krieg was sacked have abounded, but the main theory is he had fallen behind on Sarepta’s efforts to roll out its new RNA therapeutics platform—and may have possibly been involved in an internal coup to stack the board of directors and change the firm’s direction.
Just months before, Krieg had shared the stage with CEO Chris Garabedian at one of the biotech industry’s favorite staging ground, the J.P. Morgan Healthcare Conference. But within weeks Sarepta had massive infighting over strategies on how best to present new exon-skipping drugs that could differentiate it from its work on muscular dystrophy drug eteplirsen, now delayed by significant FDA concern. During the squabbling, Krieg is rumored to have attempted a grab at the top job himself—but Garabedian prevailed. The result? Krieg had to go, and fast. Sarepta said it would not be commenting beyond the 8-K filing.
4. Amarin—Joe Zakrzewski
After Amarin saw its stock plummet 80 percent on the back of the FDA’s scathing refusal of Vascepa, someone had to pay the piper, and Zakrzewski took his cue. It remains a matter of dispute whether he quite or was fired (Amarin still refers to his exit as "retirement") but either way, Zakrzewski was gone in the scant period between last year’s Thanksgiving and Christmas—a fine holiday present for any former C-level star.
5. Galena Biopharma—Mark Ahn
Mark Ahn, the president and CEO of Galena Biopharma, left Galena in August, hot on the heels of multiple scandals that included a pay-to-play scheme with an investor-relations firm that posted essays online as objective analyses without disclosing that they were paid for by the firm to promote Galena. Combine that with an ongoing investigation by the SEC into whether Galena had used the firm to artificially inflate its stock price, and you had a recipe for CEO disaster.
Despite claiming he had no knowledge that the hyped-up material was paid for by Galena, the biotech’s stock still fell off a cliff anyway, dipping from more than $7 a share to a lowly $2.20. That loss in value couldn’t be excused by the firm and Ahn bowed out soon after, saying he had resigned "to pursue other long held personal and professional goals”—presumably ones that don’t involve the SEC and massive fines.
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