Joseph E. Payne was shown the door as CEO of Arcturus last week - a move that Payne is not taking lightly.
Joseph E. Payne was shown the door as chief executive officer of Arcturus Therapeutics last week – a move that Payne is not taking lightly. In a letter to the board of directors filed with the Securities and Exchange Commission, Payne made it clear he wants his job back.
In the letter sent from attorneys Barnea, Jaffa, Lande & Co., Payne, who co-founded Arcturus, said his ouster was at the hands of four board members -- Stuart Collinson, the executive chairman of the board; Craig Willett; Daniel Geffken, managing director of Danforth Advisors, as well as a former board member of Alcobra, the company Arcturus merged with last year; and David Shapiro, the chief medical officer of Intercept Pharmaceuticals. Payne’s letter said the four board members formed a committee that was not legal under the company rules to have him removed from his position.
Payne, who is a member of the company board of directors, said he was not informed of the formation of any committee and was excluded from any talks about his position. Additionally, he noted that Pad Chivukula, who is both Arcturus’ chief scientific officer and chief operating officer as well as a member of the board of directors, was also excluded from any such meeting.
“Moreover, our client believes that in attempting to terminate his service in the Position the Four Directors are not acting in the best interests of the Company, and are in fact acting to seize control of the Company and thus advance their personal and conflicting interests,” the attorneys said in the letter.
Payne goes on to call for the board to declare that his termination is null and void and that he should immediately be reinstated as president and CEO. The letter gave the Arcturus board until Feb. 5 to act.
On Monday, the company issued a statement that Payne was terminated for conduct that the board
“deemed to be contrary to the best interests of the company and its shareholders.” The statement did not elaborate on what the conduct may have been.
The statement adds, “Our Board believes that Mr. Payne has demonstrated that he is unable to put the needs of the company and its shareholders ahead of his own self-interest.”
It’s likely that Payne’s next step will be to actually take Arcturus to court. In the letter, Payne’s attorneys quickly pointed out that Arcturus is incorporate as an Israeli company and is subject to the Israeli Companies Law. In addition to seeking relief in the courts, the letter said Payne could convene an extraordinary meeting of the shareholders and seek to change the current composition of the board of directors.
On Monday, Reuters reported Payne, who has a 13.7 percent stake in Arcturus stock, as saying he has been approached by some shareholders who expressed support for his leadership. Those supporting shareholders could back his call for an extraordinary meeting and engage in a fight for the future of the board of directors.
As CEO, Payne was instrumental in the reverse merger with Alcobra Ltd. that gained the company a position on the Nasdaq Global Market. At the time of the merger, Payne said the deal with Alcobra will establish Arcturus as a leading RNA medicines company.
Following Payne’s ouster, Arcturus tapped Mark Herbert, head of business development, to serve as interim president.
