Biotech company Phosphagenics (POH) has shocked the market with news that its chief executive, Esra Ogru, has been relieved of her duties pending an investigation into accounting irregularities.
The company is tight lipped about the affair as it is still investigating the allegations, although a spokesperson for POH said there was no risk to the financial health of the company.
The alleged accounting hole is probably measured in a couple of hundreds of thousands at worst as POH declared that it still has $14.1 million in the bank compared with $16.9 million that it reported for the end of last year.
POH’s clinical trial programs will still proceed as planned, but the biggest risk to the value of the company is not the missing money but who can succeed Ogru if she leaves the company. Its stock dropped 2c to 11c
Ogru is well regarded in the industry and is the driving force behind POH. Even if Ogru is cleared of any wrongdoing, it is unclear if she will want to return to the role after such a blow up.
Executive director and joint chief executive Harry Rosen has taken over Ogru’s responsibilities for the time being, but he is not seen to be an ideal candidate to take POH to the next phase of growth.
However, industry insiders say that the market might find POH’s independent director Sandra Webb a suitable long-term replacement due to her experience in building successful biotech businesses, like Amrad Corporation (which was sold to CSL).
Another candidate who might also be well received is Peter Smith, the former chief executive of Alchemia (ACL).
POH is developing opioid patches that can deliver pain relief through the skin.
POH and ACL are Uncapped 100 companies.