Aeterna accuses ex-CEO of secret plot to buy lead asset

Aeterna Zentaris has accused its former CEO and general counsel of plotting secretly to buy its lead candidate. The tiny, floundering biotech made the claim in a statement disclosing legal action it has begun against the pair over alleged disclosures of confidential information.

David Dodd, the former CEO, and Philip Theodore, the general counsel, stand accused of mounting two secret campaigns. As Aeterna tells it, Dodd and Theodore’s first secret plan, dubbed "Project Rescue," sought to transfer the U.S. rights to the biotech’s Macrilen to RiversEdge Bioventures or a newly-created company. Dodd set up RiversEdge in 2009 to provide advice and investment services to life sciences companies.

Aeterna accuses Dodd and Theodore of hatching that plan in June, maybe earlier. The rebooted plan, "Project Rescue—Version 2," allegedly took flight last month.

This time around Dodd and Theodore enlisted the support of Graeme Roustan, who Aeterna calls as "self-styled shareholder activist" in its telling of the events. Roustan asked for a seat on the board on July 7. Dodd is said to have objected to being excluded from communications between Roustan and the board. On July 20, Aeterna ousted Dodd "for his repeated refusal to implement express directives of the board."

Aeterna claims evidence of the plots came to light in investigations it began after Dodd left. The biotech said it found a document titled "Outline of Proposed Agreement with Graeme Roustan" that laid out how the alleged conspirators would mount a proxy contest. Aeterna said Theodore created that document. On July 28, Aeterna parted company with its general counsel. Theodore is accused of disclosing and making unauthorized use of proprietary and confidential information.

In its legal action, Aeterna is seeking injunctions to stop Dodd and Theodore from using its confidential information without permission and from "mounting a tainted proxy contest."

At the center of the scrap is a candidate few people would consider worth fighting for. Aeterna has now put Macrilen, also known as macimorelin, through two phase 3 trials to test its ability to evaluate growth hormone deficiency in adults. Both trials failed.

The company went ahead and filed for approval after posting data from the first trial, only to be knocked back by the FDA. Aeterna responded by running a second trial. And, despite that study also missing its primary goal, Aeterna again submitted a NDA. The biotech will learn the FDA’s decision by the end of the year.