Source – Paratek Pharmaceuticals
On 29 June, Paratek Pharmaceuticals is scheduled to hold its annual meeting, but a contentious situation is already unfolding surrounding the company’s proposed sale to investment firms Novo Holdings and Gurnet Point for $462 million.
Activist investor NexPoint Asset Management, which holds a 12% stake in Paratek’s common stock, is aiming to disrupt the deal. In an open letter to the company’s board, the Dallas-based investment firm expresses concerns that the sale may not serve the best interests of shareholders.
NexPoint is closely examining the board’s approval process for the deal and has requested additional information from Paratek regarding how it was conducted. The investor is also threatening to withhold its vote on the re-election of three board members due to “serious concerns with the board’s lack of oversight in holding management accountable for years of underperformance.”
Furthermore, NexPoint states that it is withholding votes because the board has approved an executive compensation structure that it believes does not align with the best interests of shareholders and could result in a financial windfall for management in the event of a company sale.
Paratek, in a regulatory filing, acknowledges the receipt of the letter and mentions ongoing discussions with NexPoint over the past several months. However, the company disagrees with the investor’s assessment of its performance.
NexPoint reveals that it invested in Paratek in 2016 based on the potential of the company’s leading drug, Nuzyra (omadacycline). This once-daily oral and intravenous antibiotic is intended for the treatment of community-acquired bacterial pneumonia and related skin infections.
Although Nuzyra received approval in 2018, its sales in 2022 amounted to $137 million, falling significantly short of Leerink’s projected peak sales of $500 million.
Paratek CEO Evan Loh, M.D., received a compensation of $2.04 million last year, a decrease from the $3.61 million he received in 2021, as stated in the company’s annual report.
NexPoint also highlights the decline in Paratek’s share price, which dropped from $8.86 at the time of Nuzyra’s approval to $1.24 by the end of May this year.
Paratek announced the planned sale of the company for $462 million. The market capitalization of Paratek currently stands at $130 million, down from $780 million in 2018. In 2022, the company reported revenue of $160 million.