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CEO gets the axe: Arcturus relieve Payne of position

Published on: 07/02/18

Early in February, Arcturus Therapeutics revealed that it had let its CEO, Joseph Payne, go and had replaced him as President with Market Herbert, VP of Business Development and Alliance Management, on an interim basis. The biotech did not reveal any details on the reasons behind the decision, only noting that the Board of Directors had agreed to terminate his positions.

Payne, oddly enough, was removed from the leadership position on the company’s website but was not removed from his position as a Director on the board – despite being listed as “Former President & CEO”.

The company was keen to point of that “this announcement is not related to Arcturus’ operational performance, ongoing programs, financial condition or financial reporting”. In fact, Payne had manoeuvred the company into going public – through a reverse merger with Alcobra – and had been at the helm during the recent signing of a strategic collaboration with Johnson & Johnson to develop a treatment for Hepatitis B.

The plot thickened after Payne sent a letter, through Barnea, Jaffa, Lande & Co, Law Offices, challenging the legality of removing him as CEO and President. The letter lambasts the biotech’s board and suggests the decision to remove Payne is “symptomatic to the poor corporate governance demonstrated in recent months (since the completion of the merger of [Alcobra] and [Arcturus]) by the Board, under the leadership of Stuart Collinson, the Executive Chairman of the Board. Such poor corporate governance includes, inter alia, failure by Board committees to report to the Board and failure to produce minutes of Board meetings.”

The letter also reveals that Payne was physically removed from the building, without being present at a meeting that agreed the termination of his role. The company’s share price sank to $5.93 on the announcement that the CEO would leave, and has now settled at $6.31 – $1 lower compared with the day prior to the announcement. It looks likely that the case will rumble on for some time, with neither side looking to back down in the power struggle for the leadership of the company.

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