The shakeout at Oxygen Biotherapeutics (NASDAQ:OXBT) continues with two board members of the biotechnology company resigning in the wake of disclosures of alleged improprieties leading to the ouster of former CEO Chris Stern.
Morrisville, North Carolina-based Oxygen said the resignations of Rene Eckert and J. Melville Engle were not the result of any disagreement with the company or the board of directors. The resignations, effective September 30, followed shareholder votes to elect members of the board of directors. Oxygen’s board had been six. COO and board member Richard Kiral is retiring and was not up for election. While three of the five sitting members of the board received comfortable majorities supporting their election, an overwhelming number of shareholders withheld votes for Engle and Eckert.
In his resignation letter filed with the Securities and Exchange Commission, Engle acknowledged the vote as “an indicator of desired change.” Eckert gave a little more detail in his letter.
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“Based on this feedback, I believe I have lost the confidence of the Company’s stockholders, particularly with respect to my role as chairman of the Compensation Committee, and can no longer effectively serve them as a director,” Eckert wrote.
Oxygen’s board is now three members led by new chairman Dr. Ronald Blanck. Blanck is chairman of federal health services consulting firm Martin, Blanck & Associates and a 32-year military veteran who served as lieutenant general and surgeon general of the U.S. Army.
Oxygen Biotherapeutics develops therapies that promote the delivery of oxygen to damaged tissue. The company has commercialized a cosmetic skin product and is developing therapeutic applications of its technology. A wound treatment is in pre-clinical studies; potential traumatic brain injury treatment OxyCyte is in phase 2 clinical trials.
Stern, CEO of Oxygen since 2009, was dismissed from both positions on August 24. No reason was given, though the company said at the time that Stern’s termination was “for cause” and was connected to an audit committee investigation. With Stern’s departure from the company, board member Eckert was named interim board chairman. CFO Michael Jebsen was named interim CEO.
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Oxygen Biotherapeutics last month disclosed findings of the internal inquiry that led to the Stern’s termination. The audit concluded that Stern misrepresented his academic background and entered into secret securities deals with a vendor for personal gain that he tried to cover up.
During the September 30 shareholder meeting, Oxygen’s board of directors approved an amendment to the company’s “Code of Ethics and Business Conduct” to explicitly state that providing false or misleading information in response to a company investigation is a violation of the code subject to discipline. The amendment also outlines disclosure requirements for transactions involving both board members and company officers. Shareholders did not approve a proposal to classify the board into three classes with staggered terms. But when it came to electing the directors, neither Engle nor Eckert had the shareholders’ support.
In a separate announcement, Oxygen Biotherapeutics said that Chief Medical Officer Dr. Gerald Klein has given notice he will resign this month to take a post with another company. While there is no indication that Klein’s move is related to the tumult at Oxygen, his departure leaves the company needing to fill two top management positions while managing the progress of compounds through pre-clinical and clinical development.
