Northwest Biotherapeutics, the struggling US biotech company, has rejected an attempt by fund manager Neil Woodford to force the appointment of a former FBI agent to its board.
Mr Woodford, one of the UK’s best known investors, holds a 28 per cent stake in Northwest. He wanted Elliott Leary, an FBI special agent for 35 years, to join the company as a non-executive director after damaging allegations about its financial practices were published online in October.
Northwest, whose shares have fallen by almost half in the past three months, has denied the allegations.
The company known for developing cancer therapies has been hit by negative reports about its business since mid 2014. An unsigned report published this October by an entity named Phase Five Research alleged Northwest “has been involved in various undisclosed transactions” with chief executive Linda Powers “and her companies”.
Ms Powers has denied the allegations.
Mr Woodford, who has invested $180m in Northwest since April 2014, said Mr Leary had “financial expertise” and “extensive experience of accounting and financial matters”.
Woodford Investment Management, the company set up by the fund manager last year, sent a letter to Ms Powers at the end of November that stated: “We believe [Mr Leary’s] skills are especially suited to the situation of the company in relation to the various allegations of financial improprieties and regulatory failure that have been published by at least one anonymous source.”
Northwest had said it was considering Mr Woodford’s proposed candidate.
But on Tuesday the biotech company said Mr Leary, who became a director in the forensic and litigation unit at consultancy KPMG after working at the FBI, was not a good “fit” for its board.
“[Mr Leary] has never served on any board, has no biotech experience and no pharma experience other than certain government investigations, [and] has no experience working with companies subjected to stock manipulation,” the company said in a statement.
Northwest confirmed, however, that it would launch an investigation into the allegations and appoint an independent director to the board.
The company has hired Charles Price, another former FBI special agent, to help carry out the investigation. It wants Mr Price to establish whether the allegations are a deliberate attempt to manipulate its stock price.
Northwest is the 12th-largest holding in Mr Woodford’s £835m Patient Capital Trust, representing 2.4 per cent of its assets. The biotech company also accounts for 0.76 per cent of his £8bn Equity Income fund.
Mr Woodford, who has been criticised by some market participants for failing to appoint a board member to the company before the allegations became public, said he was “pleased” Northwest had agreed to appoint a new non-executive director.