Arcturus Reinstates Fired CEO After Regime Change in Boardroom

The San Diego RNA drug developer Arcturus Therapeutics (NASDAQ: [[ticker:ARCT]]) on Thursday reinstated fired CEO Joseph Payne and named ResMed (NYSE: [[ticker:RMD]]) founder Peter Farrell as chairman of the company’s new board of directors.

The four members of the company’s previous board, who resigned as part of an agreement reached last weekend, fired Payne in January, alleging in a lawsuit that he had misled them to advance his personal interests.

Payne’s dismissal triggered a power struggle. He co-founded Arcturus and is the company’s largest shareholder, with a 13.7 percent stake. Payne mounted a proxy challenge that asked shareholders to replace the incumbent board with four directors he had recruited. The replacement board included Farrell, who is the founding CEO and current chairman of ResMed, the San Diego-based maker of sleep apnea breathing machines.

A showdown was set for a shareholder’s meeting on June 25th, but Payne apparently held the upper hand. In a March 27 lawsuit that Arcturus filed against Payne, the company (under the control of the previous board) disclosed that a group of shareholders allied with Payne controlled almost half of the votes cast in a February 26 shareholder meeting. As a voting bloc, the Payne group seemed likely to also control the outcome of the proxy fight at the June 25 shareholder meeting.

In addition to appointing Payne’s candidates for the replacement board, the agreement reached over the weekend also settled litigation between the warring sides. Payne’s return seemed likely when the settlement was disclosed, but it wasn’t confirmed until Thursday.

A brief statement from the company quotes Payne as saying he’s “extremely pleased” to be reinstated at Arcturus. “With the litigation behind us, the team is 100 percent committed to developing our pipeline of novel RNA therapeutics, to strengthening and advancing all of our pharmaceutical partnerships, and to creating value for our shareholders,” he said.

Arcturus also reinstated Padmanabh “Pad” Chivukula as its chief scientific officer and chief operating officer. He resigned from the company after Payne was fired. Payne and Chivukula founded Arcturus in 2013 to advance a new approach to the development of RNA drugs for infectious disease, cystic fibrosis, nonalcoholic steatohepatitis (NASH), and rare liver diseases.

In response to a question from Xconomy about the previously scheduled shareholder meeting set for June 25, a spokesman for the company said earlier this week that the new board “will be meeting and issuing an official update to the market in due course.”

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.