Health Check: Which biotech boards are at risk of a 'second strike'?

A number of biotechs face ‘second strike’ motions this AGM season
Botanix Pharmaceuticals holders yesterday vented their ire, but the company’s US rollout plans are on track
BCAL Diagnostics claims its breast test is the best test as it eyes a local launch

The AGM season is shaping up as a nervous time for a bevy of life science companies facing a ‘second strike’ motion that could lead to a board spill.

To explain: an ASX-listed company that has its remuneration report opposed by 25% or more of voting shareholders incurs a first ‘strike’, with a second strike motion tabled in the subsequent year.

If the rem report isn’t passed a second time, all board positions are subject to a follow-on spill vote.

Biotechs in the firing line this month include – in alphabetical order – Adherium (ASX:ADR), Atomo Diagnostics (ASX:AT1), Island Pharmaceuticals (ASX:ILA), Mayne Pharma (ASX:MYX), Paradigm Biopharmaceuticals (ASX:PAR), Prescient Therapeutics (ASX:PTX) and, tomorrow, Recce Pharmaceuticals (ASX:) .

Cannabis marketplace Vitura Health (ASX:VIT) is due to host its AGM on the Gold Coast on November 27, having incurred a 57% no vote last year (shareholders must have been feeling especially Bolshie, as motions to elect three directors were voted down as well).

Last year, Island’s rem report copped 90% opposition and Prescient and Atomo incurred the wrath of 72% and 67% of its holders respectively.

At the other end of the spectrum, Paradigm and Adherium were unlucky to receive first strikes with ‘no’ votes of 25.33% and 27.72% respectively.

Then again, tonight’s presidential election and the fate of the free world could be decided on a lower margin.

Reassuringly for jittery boards, knock-on spill resolutions are rare. To the best of your columnist’s addled memory, none has succeeded in the 13 years the rem vote provision has been in place.

On October 16, 52% of investors in skin disorders house Clinuvel Pharmaceuticals (ASX:CUV) voted down the rem report for a second time by a convincing margin of 52% – but only 10% backed the automatic spill motion.

Unlike, say, a motion to award a CEO with performance rights at a ridiculously low hurdle price, rem votes also tend to be a lightning rod for opaque, unvoiced concerns such as general share performance.

That may have been the case with CSL (ASX:CSL), which incurred a first strike of 26.36% at last month’s AGM.

In May, around 47% of proxy votes delivered a first strike to Sigma Healthcare (ASX:SIG), which proposes to merge with Chemist Warehouse.

At the very least second strikes are embarrassing and boards usually go out of their way to address tangible concerns after the first strike.

Botanix is on track, but some holders are hot and sweaty

Sometimes the shareholder protest is more specific.

At yesterday’s Botanix AGM, only 6.8% of shareholders opposed the remuneration report but up to 35% of investors opposed resolutions to award performance rights to directors.

The motions were to award 24 million performance rights to chairman Vince Ippolito and 3 million rights each to directors Matthew Callahan, Dr Stewart Washer, Danny Sharp and Dr William Bosch.

In the case of Mr Sharp and Dr Washer, the motions were opposed by close to 34.94% of holders, while Dr Bosch copped a 32% no vote.

But investors were more being inclined to awarding rights to Ippolito and Callahan, with no votes of 7.45% and 7.42%, respectively.

Given the 50% threshold for defeat of such motions, they still passed easily.

Having attained US Food & Drug Administration approval, Botanix is in the throes of a US rollout of Sofdra, its treatment for excessive sweating (primary axillary hyperhidrosis).

Ippolito told the meeting the company was in the throes of doubling its US sales team with the addition of 27 reps, while also signing its first reimbursement contract with a payer (insurer).

“We are poised to enter this underserved market of ten million sufferers as a new option, designed to address a long unmet need,” he said.

Botanix shares today were 0.8% lower at 31.5 cents, having gained 7.25% yesterday.

BCAL off and racing in local breast cancer assay launch

As a precursor to a broader local roll-out, BCAL Diagnostics plans to launch its blood-based breast cancer assay locally at the Sydney Breast Clinic in the March quarter of next year.

BCAL claims the tool, unimaginatively monikered Breastest, is more accurate and more accessible than standard mammograms.

“As planned, Breastest will be available to patients as an adjunct to the standard mammogram, with the intention of providing improved results and greater surety to clinicians and patients,” the company said this morning.

The phase one (SBC) rollout will provide “learnings” that can be applied to the phase two launch across multiple sites.

“We are already in discussions with additional private, multi-disciplinary breast screening sites across Australia,” CEO Shane Ryan says.

Breastest is being sold under the lab-developed assay route, a stepping stone to full Therapeutic Goods Administration approval that requires the imprimatur of the National Association of Testing Authorities (NATA).

BCAL had flagged a calendar 2024 launch, but it was delayed for “several weeks” as NATA asked for more information after having a squiz at the company’s lab in North Ryde, Sydney.

Most health diagnostic developers make the capacious US market the first port of call.

But BCAL founder and exec chair Jayne Shaw is passionate about making the test available initially to all Australian women, especially in regional areas where it’s easier to access a blood test than a mammogram.

(A former nurse and entrepreneur, Shaw also co-founded the Sydney Breast Clinic.)

Around 20,000 Australian breast cancer cases are detected annually, with 3000 deaths.

When the company has its ducks in a row locally, it will go global.

We thought it was all good news, but BCAL shares fell 4.8% to 10 cents.

At Stockhead, we tell it as it is. While Island, Paradigm, Prescient and Recce are Stockhead advertisers, they did not sponsor this article