BigShop retreats from Biota bid, but no hard feelings

Perth entrepreneur Farooq Khan is maintaining a stiff upper lip in the aftermath of his failed bid for a board seat on Biota Holdings.

The Perth entrepreneur might be entitled to feel miffed over some of the harsh language directed at him by the biotech's board and senior management in the course of his six-month tilt at the drug development company.

He was depicted as an opportunistic corporate raider intent on the company's cashbox who was trying to mislead shareholders about his true intentions.

But Khan plays a dead bat when asked if he feels any resentment over the verbal attacks. "You prefer not to have these things said," he replies briefly.

But a hint of bitterness creeps in when he is pressed on the issue: "A personal attack was not a professional thing to do. It is typical of the Biota board that they chose to play the man and not the ball."

Sweetening the memory for Khan will be the $500,000-plus he has earned in the past two weeks by unloading 5.2 million shares of the nearly 10 per cent stake he built in Biota during his bid.

Ironically, Khan was able to exit with a profit because of the policies of the board he targeted as a group of underperformers.

Biota shares surged sharply higher last month on promising news from US trials of a technology platform that the Australian parent company controlled thanks to a board decision last year.

The upward price jag allowed Khan to dispose of most of his shares at an average of slightly more than 60 cents after buying them for a bit less than 50c: "We would have liked to make more but we have made a clear profit and you can't fault that."

Despite his financial win, Khan is in no mood to dispense accolades to Biota's board.

"We maintained from day one that the company should and can do a lot better," he says. "The fact it now might be on a par with what the market is doing doesn't translate into a particularly great vote of confidence.

"My view is that this board could do a lot better. We still think Biota is undervalued and that we could have a done a better job in contributing to their performance than the current board."

Khan hasn't made a definitive exit from the stock. As of early this week, his listed shell, Bigshop.com.au, still owned two million shares or about two percent of Biota. He is keeping his plans for the rest of the parcel to himself for now.

"It is too soon to say. We are still thinking about what we do and whether we want to be long-term [investors in Biota]," he says.

Khan was roundly defeated when he faced off against the board about a month ago at a special general meeting.

"It is disappointing that we didn't get the resolutions passed [which would have given Khan a board seat and triggered an independent review of the company's strategy]," he says.

"We weren't allowed to get a fair hearing from shareholders because the chairman didn't allow debate on the day.

"My resolution for a board seat lost but over 2000 shareholders voted in favour of it. I believe Biota just painted a negative picture of BigShop on the register and scared shareholders.

"Somewhere between five and 10 per cent of shareholders did support us. The resolution to reduce directors' fees would have passed if the chairman had not voted his open proxies against it."

Overall, his foray into biotech hasn't poisoned his view of the sector, the Perth entrepreneur says.

"It has been a positive experience. We haven't sold out in full and we are looking at the investment with no fixed position in mind."

And he's willing to pass this advice along to potential investors in biotech companies: "You have to be a little bit cleverer than the average investor. You have to understand your company and what it does and seek outside expert advice on formulating whether it is good or not."