Management Turnover as Change Agent

Tuesday, February 5, 2008

Altus Pharmaceutical CEO Resigns

Altus Pharmaceuticals Inc. ALTU (NASDAQ), a biopharmaceutical company focused on the development and commercialization of oral and injectable protein therapeutics for patients with gastrointestinal and metabolic disorders, today announced the resignation of its president and CEO, Sheldon Berkle. Berkle's resignation was announced with no stated explanation. He had been CEO of the company for two and a half years. The board appointed Chairman Dr. David D. Pendergast to serve as the interim CEO. Dr. Pendergast who has been a member of the board since 2006 was only appointed chairman back in early November 2007.

Pendergast recently retired as President of Human Genetics Therapies at Shire Pharmaceuticals plc where he had been responsible for the discovery, development, manufacture and commercialization of protein therapeutics. According to a CNN Money story his interim appointment was applauded by Cowen and Company analyst, Eric Schmidt who in a note to investors,
... expressed enthusiasm that Pendergast will be taking the helm, predicting he can implement a turnaround at Altus. "Given that Altus's track record as a public company has been poor and that management credibility has suffered as a result, we believe most investors will welcome today's news," said Schmidt.

The analyst kept an "Outperform" rating on the company's shares, saying he thinks Altus' pipeline drugs are significantly undervalued. He kept his price target at $5.60. In July, the Food and Drug Administration dealt the company a setback by revoking
orphan drug status for Altus' pancreatic insufficiency treatment. A rare condition, pancreatic insufficiency occurs when the pancreas fails to secrete the sufficient chemicals and enzymes for digestion. Orphan drug status is granted to drugs being developed to treat such conditions and comes with market exclusivity and development aid.
Altus has experienced what might appear to have been a number of setbacks over the last few months. For example, back in December,
Genentech ended a collaboration (with Altus) on a human growth hormone drug candidate, and wondered if there was something wrong with the product.
Many analysts offered different reasons for the unexpected decision by Genenetech, some positive and some negative. The real question remains whether the company has some solid potential drug candidates in its pipeline and whether Pendergast, or at some point in the future a new CEO, can manage to turn things around and get the company back on the right track.

Stay tuned.

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