Phosphagenics board facing shake-up

Phosphagenics (POH) is believed to be close to announcing a board reshuffle to appease aggrieved shareholders following allegations of fraud against its former chief executive over six months ago.

The issue of governance continues to hang over the biotech since its former chief, Esra Ogru, was implicated by Phosphagenics in invoicing and accounting irregularities worth $5.7 million that stretched over eight years.

This is an unwelcomed distraction as it is stealing oxygen from any good news the company releases, such as this morning’s announcement that pharmaceutical giant Novartis has started selling its pain treatment gel in India (called Voveran in that country, but it is better known as Voltaren here), which uses Phosphagenics’ through-the-skin technology.

The stock was unmoved at 13 cents at 1:30pm AEDT, as shareholders questioned how serious the company is at cleaning up its act given that its board of directors are resisting pressure to resign.

However, acting chief executive Harry Rosen says resistance from some board members to leave is waning, although he refused to offer a timetable on changes to the board.

“In the end, reality takes over and I think we have passed all that,” Rosen tells Eureka Report. “It’s just a matter of finding the right people who can take this company to where we want it to be.”

There is also a question of leadership. Phosphagenics is looking for a permanent chief executive but Rosen says the company has been unsuccessful so far in recruiting a replacement.

Novartis is not the only one selling the pain treatment gel using Phosphagenics’ technology, called TPM, in India. Themis Medicare, the supplier of TPM to the Asian country, will also launch its own version of the gel.

No financial details on the deal were released, but this development is not expected to be a game changer for Phosphagenics. The main game is to prove that TPM can be successfully used in oxymorphone and oxycodone patches.