In a settlement approved by Israeli District Court on Sunday, Arcturus Therapeutics and its ousted CEO Joseph Payne agreed to end litigation against each other. The deal comes nearly four months after the RNA biotech's board voted to terminate Payne.
The ouster was not linked to the company's “operational performance, ongoing programs, financial condition or financial reporting,” the company said at the time. Mark Herbert, Arcturus' vice president of business development, stepped in as interim CEO. Soon after, Pad Chivukula, the chief scientific officer and chief operating officer resigned.
Payne fought back, having his attorneys write a letter to Arcturus claiming that the board of directors left him and Chivukula out of "board discussions and votes." He laid the blame on four directors: Stuart Collinson, executive chairman of the board, Craig Willett, Daniel Geffken and Intercept CMO David Shapiro. They made their decision to terminate Payne in violation of Israeli Companies Law, the letter said. It also demanded Payne be reinstated as CEO.
As part of the settlement agreement, Collinson, Willett, Geffken and Shapiro have resigned from the board. Peter Farrell, Ph.D., Andrew Sassine, James Barlow and Magda Marquet, Ph.D., will replace them as independent directors on the board, according to a statement.
“We are pleased to have come together to reach this very positive outcome that allows Arcturus to move forward, focused on creating substantial value for all shareholders,” Payne said in the statement. “We warmly appreciate the continued support from our shareholders, and the encouragement to reach an amicable resolution through this agreement. The Company has accomplished a great deal in the last five years, and I’m confident that with the strong leadership of the board and management team, the best days are ahead for Arcturus.”
Arcturus' pipeline is based on a lipid-mediated delivery system and oligomer technology that it thinks will solve two challenges in RNA medicine: enabling systemic delivery to targeted tissues and boosting stability and potency while limiting toxicity.
While it is headquartered in San Diego, Arcturus backed its way onto the Nasdaq in September through a reverse merger with Israel-based Alcobra. That move, Payne's letter alleged, is the root of “the poor corporate governance demonstrated in recent months,” that led to his ouster.