When’s the right thing to do the honourable thing?
Surely the Progen directors can see the writing on the wall?
The company’s planned merger with Avexsa has bitten the dust, despite a month's worth of increasingly desperate attempts to get it over the line.
But despite the overwhelming shareholder opposition to the plan – 83 per cent of submitted proxies opposed, based on the figures released by Progen yesterday – the Progen board seems determined to push on through, still recommending against the Cytopia proposal to spill the board, and instead proposing a larger share buyback and a return to the development of liver cancer drug PI88 in the Asian market.
In any other governance framework, such an overwhelming vote on no confidence in the best plan a leadership has come up with would trigger a mass resignation – but the Progen board seems intent on clinging to power.
Putting PI88 back into development seems to be a clear attempt to appeal to votes associated with the Progen Shareholder Group, who narrowly failed in their own attempt to sack the board earlier this year – running an Asian registration focus for the drug was one of the proposals put forward by the PSG, which was headed up by former CSL VP Bob Moses, and others.
The increased share buyback offer also seems tailored to attract the support of the institutional holders who just want to get their cash back and get the hell out of the sector.
And Progen gloated yesterday that Cytopia’s chief executive Andrew MacDonald convinced less than 15 per cent of the total shareholder base to hand him their proxy.
From all of that, it seems the company’s latest strategy is based around trying to fracture the base of aggrieved shareholders who were opposed to the Avexa merger, and may be happy to leave the incumbents in place in exchange for a quick route to a capital return.
And this might be a winning strategy – introducing a new board may delay a cash return longer than some instos want to wait, and maybe there are shareholders who still believe in the prospects for PI88 and the rest of the pipeline enough to let the incumbents have a second crack at commercialising it.
But I doubt it. The situation at Progen has been a running debacle since the company decided to can development of PI88 last July, and there seems to be little faith amongst investors that the current board can rescue the company from its problems.
The sentiment being expressed, both publicly and privately, is “enough is enough”.
Even if the board survive the spill on March 27, by some quirk of the numbers, they should consider doing the honourable thing anyway.
