Neurobiological
Technologies, Inc. (NDAQ: NTII) suspended its stroke drug development, which prompted
at least one activist shareholder to demand that value be returned to shareholders.
Highland Capital, which owns 17.6% of the firm, sent a letter to the board demanding
that the company liquidate its assets and distribute the proceeds to shareholders.
However, the company appears to be taking a different course of operation by hiring
a new President and CEO.
"Following a thorough review of the interim data, it was determined that there was
no group of patients in which Viprinex improved outcome, and therefore further development
is not warranted," said Warren W. Wasiewski, Chief Medical Officer. "We are very disappointed
that another potential treatment for this devastating disease has failed to show benefit
for this patient population."
After the poor results, Neurobiological Technologies announced that it would begin
reducing its workforce substantially in order to lower costs and preserve cash. However,
Highland Capital learned that the company is seeking to hire a new COE and President,
and that such action shows an intention to continue operations despite the lack of
a viable new technology to create value in the future.
According to a
Schedule
13D filing with the SEC:
Highland Capital delivered a letter to the Board requesting the expeditious wind down
of the Issuer’s business. In the letter, Highland Capital expressed its belief that,
due to the failure of the Viprinex program, the Issuer has no incremental value as
an ongoing concern. Highland Capital expressed a strong belief that the only way to
return value to the shareholders is through liquidation of the Issuer’s assets. The
letter notes that the Issuer is seeking to hire a new CEO and President, and that
such action shows an intention to continue operations. Highland Capital believes that
the Board should immediately decide to liquidate the Issuer, and that hiring a new
CEO and President is unnecessary if such action is to be taken.. Highland Capital
expressly lists various assets, including cash, currently held by the Issuer which
are all capable of near-term liquidation. Highland Capital asserts that it is the
Issuer’s Board of Directors’ fiduciary duty to the public shareholders to liquidate
these assets, wind down business, and return all proceeds to the public shareholders.
Highland Capital expressed concern that the Board was considering “strategic options”
to continue business which would result in the immediate degradation and eventual
loss of all shareholder value.
