Reuters: Global Markets: QLT shares rise after activist prevails in vote

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QLT shares rise after activist prevails in vote Jun 5th 2012, 19:52 By Claire Sibonney Tue Jun 5, 2012 3:52pm EDT (Reuters) - Shares of QLT Inc rose nearly 5 percent on Tuesday, a day after an activist investor's slate of nominees for the board of the Canadian eye drug developer prevailed in a shareholder vote, signaling a shakeup at the company. Six of the seven directors elected at the company's annual general meeting on Monday were nominated by NB Public Equity Komplementar ApS, a Danish investment fund with a 15.2 percent stake in QLT. That makes NB the company's second-biggest shareholder. The fund, which invests mostly in biopharmaceutical companies, said in the filing in May that it thought a change was needed on the board, without revealing its reasoning. All six NB nominees were elected. Among those ousted from the board was Bob Butchofsky, the incumbent chairman and the company's chief executive. QLT put up a full slate of seven nominees. Shareholders have expressed frustration over the company's spending on developing a treatment of dry eye syndrome. The treatment is a routine office procedure in which an ocular device known as a punctal plug is placed in a patient's tear duct. "We've raised some issues in the past about some of the funding of their pipeline, specifically the punctual plug program," said Morningstar equity analyst Michael Waterhouse in Chicago. "This is something they've had in development for years and years, and it seems to go nowhere," he said. "With the new board in there, potentially they think they can obviously shake things up a little bit." Critics say that market is already saturated with competition from bigger companies such as Allergan Inc (AGN.N) and Novartis AG (NOVN.VX), and that OLT's program has detracted from its development of QLT091001, a promising treatment for inherited retinal diseases. The company aims to move the retinal treatment into a late-stage trial this year. U.S. health regulators have given treatment orphan-drug status, which makes it easier to win marketing approval for drugs to treat for rare diseases. Shareholders have also criticized the company for not using cash flow to pay a quarterly dividend. In a statement on Tuesday, the Danish fund said it welcomed the decision by shareholders to remake the board. "We look forward to the realization of the full potential of the company's pipeline and commercial products," said Florian Schönharting, NB's chief investment officer. Vancouver-based QLT was a strong performer in the early 2000s mostly powered by sales of its Visudyne treatment for macular degeneration, a common form of age-related blindness. Since then competing products such as Novartis's Lucentis, approved in 2006, have eroded QLT's share of that market. After Butchofsky took over in 2005, the company sold off assets to focus on developing ocular drugs, including the treatment of inherited retinal diseases. QLT still receives royalties on some older products. Some analysts speculate that if the latest trials are unsuccessful, the company could sell its remaining product rights and royalty deals, and essentially liquidate. Waterhouse said that a more positive outcome would be a sale of the company on the back of its retinal disease treatments. "If the drug looks like it's doing well and it's a phase 2 or phase 3 trial, they could potentially stay standalone or sell the company because a potential orphan drug like that could be attractive to a lot of larger pharmaceutical companies." The newly appointed board of directors includes Kathryn Falberg, who had been nominated by both the shareholder and QLT's management. Jason Aryeh was chosen as board chairman. Shares of QLT were up nearly 5 percent at C$8.20 on the Toronto Stock Exchange on Tuesday. (Editing by Frank McGurty) Link this Share this Digg this Email Reprints

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