CEO change off the agenda at Ventracor AGM

Shareholders at Ventracor's annual general meeting in Brisbane yesterday raised not a jot of concern about the board's surprise decision this week to replace CEO Michael Spooner with former Sirtex chief Colin Sutton.

The only two hiccups for the board during a relatively benign meeting concerned the AUD$2.25 price offered to institutions earlier this year as part of a $33 million placement, and a minor delay in the re-election of chair John Massey as chairman.

For the financial year, Ventracor's expenses grew from $11.1 million to $14.9 million and the company recorded a loss of $9.4 million. The loss, Massey told the company's meeting, was in line with expectations.

But the real financial story for Ventracor is much more positive than the headline numbers suggest. The placement to institutional investors and a renounceable rights issue to shareholders has swelled the company's coffers to over $74 million.

As Australian Biotechnology News reported on Tuesday, the board moved to replace Spooner with a CEO it believed was better equipped to manage the next phase of the company's growth.

Despite a very successful year in which the it has raised over $66 million dollars and commenced a pilot of its VentrAssist artificial heart, shareholders, it appeared, were unconcerned by the move to ditch their demonstrably successful chief executive.

Perhaps that was because in Sutton, they are acquiring a leader with an established track record of managing the clinical trials and commercialisation of a medical device company.

As part of the settlement package, Spooner achieved the remarkable quinella of receiving both a termination payment and a performance bonus at the same time.

The only note of discord in the meeting was related to the decision to offer the placement to institutional investors at $2.25 with several shareholders expressing a belief that a better price was achievable.

On the board's behalf, Massey defended the price as appropriate and pointed out that existing shareholders were later offered the same price as part of the rights issue, with equal success.

Speaking to Australian Biotechnology News after the meeting, Massey said: "Our view was, we could have finessed the price up, maybe five cents, maybe 10 cents but who knows it could have gone the other way. But getting the money was more important to us than finessing the price."

Massey told the meeting Ventracor was unlikely to seek more money from the markets and later told ABN that the bulk of the money raised this year would be used to fund clinical trials and to push the company along the path to commercialisation. This would include enhancing the company's skill sets.

"The team is already expanding," Massey said. "We have a clinical affairs manager, Dr Monica Hope, a head of manufacturing transition whose job is to look at how we take the production process from an R&D situation and through to full-scale production, and there's also a new QA manager."

Massey was re-elected chairman, but only after several shareholders called for a poll vote, rather than a show of hands. He was returned comfortably by 74.1 per cent to 24.9 per cent.

Non-executive directors had their compensation increased with nary a voice of dissent.

Ventracor is one of the darlings of the local biotech sector, having grown its market capitalisation to approximately $450 million from almost a standing start five years ago.

The company is currently piloting a left ventricular assistance device called VentrAssist at the Alfred Hospital in Melbourne. The artificial heart has been implanted in three patients, two of whom have already been released from hospital.

Ventracor is seeking to exploit a market potentially worth $12 billion internationally. The market outlook improved considerably in early October when the US Centre for Medicare and Medicaid Services announced it would allow reimbursement of the costs of the devices in patients who are not candidates for transplantation. It indicated it was willing to consider costs starting at $US70,000 and running as high as $US180,000 in some cases.

The company's competitors, some of whom are already in clinical trials in Europe, include Berlin Heart, Thoratech and Arrow Medical. Not all of those trials are sailing smoothly, Massey said.