NEW YORK (HedgeWorld.com)–Third Point LLC, the hedge fund firm of Daniel Loeb, has taken a large position (13.7 percent of equity) in Nabi Biopharmaceuticals Inc., of Boca Raton, Fla., a company with an annual shareholders meeting slated for May 12.
In a letter to the Nabi board of directors dated April 27, Mr. Loeb said that Third Point has taken this position because the company has substantial asset value not reflected in its stock price. He also offered recommendations for correcting that situation.
Much of Nabi’s asset value is in the product PhosLo, a treatment for an excess of phosphate in the blood in patients with kidney disease. Nabi also has an anti-staph vaccine and a smoking-cessation product in the developmental pipeline, but its stock price took a big hit last fall after disappointing clinical results in a trial of the anti-staph vaccine. More recently, Nabi lost $0.30 a share in the first quarter 2006, a larger loss than Wall Street analysts had generally expected.
Mr. Loeb’s letter said that although there is said to be an ongoing process of the exploration of strategic alternatives with regard to the maximization of the shareholder value of the PhosLo assets, the process has bogged down.
“We are deeply concerned that the company intends to continue to use Lehman as its investment banker,” since Lehman has “presumably presided over, and advised upon, many of the company’s strategic missteps over the years.” Mr. Loeb is unhappy, specifically because Nabi and Lehman have required participants in the PhosLo process to “sign restrictive and unusual standstill agreements,” which suggests to him that Lehman’s real goal may be to assist management in preserving the status quo.
The letter said that Third Point demands that Nabi seek an investment bank other than Lehman, or perhaps one that will work in conjunction with Lehman, in order to explore alternatives to that status quo.
Mr. Loeb also expressed displeasure with the employee retention and option acceleration programs Nabi announced recently. He observes that the employee retention program benefited the managerial employees, rather than the scientists, which in Mr. Loeb’s view is perverse since the former have been destroying the value the latter have been creating.
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