Yesterday’s announcement that Opthea (née Circadian, ASX : CIR) completely restructured its board, is good news for the company – but it is also good news for the biotech industry.
Opthea’s board reshuffle, in my opinion, follows on what has been a spate of shareholder backlash to underperforming bioscience companies, and it is great to see boards taking action. To be clear, I think Opthea is one of the good ASX baby biotech companies and the combination of a board restructuring and simplification of the corporate structure (which I have consistently advocated) will be important steps toward creating further momentum for the company. Though it is still worth noting for all the retail investors out there that the outcome of Opthea’s current set of clinical trials will essentially also be a binary event for the company. Success will mean a hell of a lot of interest from potential suitors – and failure will more or less mean the end.
The appointment of Mr. Geoffrey Kempler and Mr. Michael Sistenich is interesting. I am slightly lukewarm about Mr. Kempler, mainly because it is my deep and profound hope that Opthea doesn’t turn into a living-dead company like Prana Biotechnology (ASX : PBT), a company that has plenty of its own (very major) corporate governance issues to deal with and a board with its own significant patches of deadwood. But then again, he is very experienced and is – by all accounts – an excellent executive mentor. Mr. Sistenich is a very positive development for the company and will no doubt bring some pragmatism around future financing – hopefully also pragmatic enough to understand that a dual ASX-NASDAQ listing is a stupid idea for this company any time in the near future (or pretty much ever).
Earlier in this short piece I said that this board change was good for not only the company, but the industry.
Because we need to start lifting our game on the way we govern ASX bioscience companies and a good place to start is by making sure we don’t have directors on a board for 10 years. Biotech companies have discrete development events that very much change the commercial and leadership needs of a company. An early clinical company has completely different governance needs than, say, a Phase III company and this should be reflected in the turnover of talent and capability in both the management team and board.
Nice job, Opthea… it must have been painful, but it will be worth it.