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12:00 AM
 | 
Jun 21, 2010
 |  BioCentury  |  Finance

Business as usual - not!

Analysts complain about Genmab's handling of CEO departure and falling valuation

If Genmab A/S were based in the U.S., activist investors would be demanding seats on the board and a say in the choice of a new CEO following last week's abrupt announcement that co-founder, President and CEO Lisa Drakeman was gone.

That might happen yet, as 8% of the company's shares are held by U.S. investors, while Hendrikus Hubertus Franciscus Stienstra, partly through Mercurius Beleggingsmaatschappij B.V. and Stimex Participatiemaatschappij B.V., own 10% of the company.

In the meantime, last week's management turmoil and the company's assertion that everything is "business as usual" are unlikely to restore investor confidence.

Genmab's wild week began with investors sending the stock up 33% to DKK58.15 on Monday when analyst Peter Aabo said in a Danish investor newsletter that GlaxoSmithKline plc might acquire the biotech to gain full control of the partners' cancer drug, Arzerra ofatumumab.

But instead of an acquisition, on Tuesday the company announced the retirement of Drakeman and that President of R&D and CSO Jan van de Winkel, who also is a company co-founder, was being elevated to CEO. On the day, the stock slipped DKK0.75 to DKK57.40.

On a Wednesday conference call to discuss the change, analysts took the opportunity to vent at Chairman Michael Widmer, complaining about the board's failure to reassure the market that plans were in place to reverse the company's stock performance in the past two years. Genmab shares have significantly underperformed the market since it began recovering in late 2008(see "Genmab Chronicles," A22).

Indeed, Genmab's share price has dropped 87% since the high in May 2007, while the BioCentury 100 Index has risen 4% in the same period.

Until mid-2007, Genmab was one of Europe's biotech darlings. The company secured a $2.1 billion deal with GSK for Arzerra in late 2006 and its market cap swelled to an all-time high of $3 billion in 2007. The biotech reported 1Q10 sales of DKK42 million ($7.5 million) for the mAb against CD20, which received accelerated approval in the U.S. last year and conditional approval in Europe in April.

Analysts also complained about the company's refusal to discuss the reasons for Drakeman's sudden...

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