Bloomberg News

Basilea Shareholder HBM Seeks Board Seats, Share Buyback

October 06, 2011

(Updates with closing share price in seventh paragraph.)

Oct. 6 (Bloomberg) -- Basilea Pharmaceutica AG’s biggest shareholder sought four seats on an expanded board and said the Swiss drugmaker should buy back shares after a 42 percent plunge in the stock.

HBM BioVentures AG asked Basilea to call a special shareholders meeting by Nov. 30, the Zug, Switzerland-based fund said in a statement today. Basilea needs help with strategic decisions as it enters negotiations with potential partners, said HBM, which owns 15 percent of the Basel-based drugmaker.

There’s “a total discrepancy between the value of the underlying assets in Basilea and the current share price,” HBM Chief Executive Officer Andreas Wicki said in a telephone interview. “You can argue that the current board has been in place for a long time, and sometimes it’s good to bring new competencies, fresh spirits in.”

Basilea, which is seeking a partner to help develop and market its ceftobiprole antibiotic, said Oct. 3 that CEO Anthony Man and Chief Operating Officer Ronald Scott would step down from the board because the company was committed to “principles of good corporate governance.”

Basilea’s board will set the date and the agenda of the next meeting and “publish the invitation in due course,” the company said in a separate statement today. The meeting probably will take place around the end of November, the company said.

Proposed Candidates

HBM proposed Thomas Werner, a former GlaxoSmithKline Plc executive; Seng Chin Mah, formerly of Novartis AG; Thomas M. Rinderknecht, a corporate lawyer; and a fourth candidate yet to be named for the board.

Basilea rose 2.35 Swiss francs, or 6.3 percent, to 39.40 francs in Zurich trading, giving the company a market value of 377.8 million francs ($410 million). The stock has fallen 38 percent in the past year.

HBM, which owns shares in about 25 health-care companies, said that given Basilea’s “excessively low share price, we expect the board of directors to seriously consider repurchases of the company’s shares.”

Basilea, which plans to apply next year for approval of ceftobiprole as a treatment for pneumonia, had 243.3 million Swiss francs in cash and short-term bank deposits as of June 30, according to a regulatory filing.

“There is no need to retain that much cash, as the company is sufficiently financed to bring ceftobiprole to market in pneumonia as a first indication,” Olav Zilian, an analyst with Helvea SA in Geneva, said in a telephone interview.

Roche Spinoff

Basilea was spun off from Roche Holding AG in 2000, the same year Henri Meier quit as Roche’s chief financial officer to form HBM, a fund that went public in February 2008. Meier remains the honorary chairman.

“It’s in the interests of all shareholders that the current tech value that is almost inexistent is recognized and brought to fruition,” HBM CEO Wicki said today.

HBM has owned shares in Basilea since the company’s initial public offering in 2004, and sold 60 percent of its stake in 2007, when the stock reached a record of 282.25 francs, Wicki said. HBM has “dramatically expanded” its position in Basilea in the past six months, he said, and held 15 percent of the stock as of Sept. 14, overtaking Basel-based Roche as the company’s biggest shareholder. Basilea is HBM’s largest holding by value, Wicki said.

--With assistance from Simeon Bennett in Geneva. Editors: Kristen Hallam, Tom Lavell

To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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