We don't want a stoush over board: Amrad

Amrad Corporation's embattled board has urged major shareholder Circadian Technologies against holding a general meeting in May, calling instead for internal discussions.

Circadian, which holds 19.3 per cent of shares in Amrad via its wholly owned subsidiary Fibre Optics, served notice on the company yesterday with a proposal to replace three board members, including its chairman.

The proposal to replace Prof John Mills, Helen Cameron and Jeremy Curnock Cook came less than a week after Amrad announced a key drug, Emfilermin, had failed in clinical trials to reduce nerve damage in cancer patients.

The news prompted a share price slide just weeks after the company completed a $15 million institutional share placement at $1.15 a share.

Circadian executive director Graeme Kaufman said shareholders were now looking for more commercial activity from Amrad.

"There has been a reasonable amount of dissatisfaction among shareholders, particularly among those who paid $1.15 in the raising to see the share price now languishing," Kaufman said.

"The unfortunate thing was that they did a capital raising just prior to two announcements and I think that was probably inappropriate, even if Emfilermin had come out fine."

Circadian has called for a general meeting of shareholders on May 26, with a proposed resolution to replace the three directors with Sigma Pharmaceuticals director Olaf O'Duill, Minter Ellison director Ian Davis and recently retired CSL vice-president Robert Moses.

Kaufman said the proposed new directors would add commercial expertise to the board mix, with O'Duill having been involved in power industry privatisations, Moses masterminding many of CSL's deals in the 1990s and Davis bringing commercial law experience.

He said Circadian, 10 per cent of which is owned by media mogul Kerry Packer, had no intention of directing Amrad through the proposed new directors, adding its goal was simply to put in place "the best possible board we can find".

But incumbent chairman Mills said the board was puzzled by Circadian's move and could not see what the new additions would add to its ranks.

"They are obviously people with substantial business expertise but not necessarily biotech expertise," Mills said.

He said the board was also surprised by the action because it had received praise from Circadian chief executive officer Leon Serry just five months earlier.

Mills added that he did not believe the Emfilermin failure was enough to change the company's view.

"I don't deny people are disappointed by the Emfilermin result," Mills said. "We're as disappointed, if not more so, but it's a technical risk of clinical trials.

"What troubled us about the market reaction is if you look at the analysis, the Emfilermin only represented 13c of the share valuation, so we were pretty surprised by the result."

He said the drug disappointment did not reflect the capability of Amrad's management and urged Circadian to negotiate rather than proceed with a general meeting.

"We don't want a stoush or a fight and we don't want a general meeting," Mills said, describing the meeting as a diversion and unnecessary cost.

"We have made it clear that we are happy to discuss things with Circadian, and I don't think a general meeting is the way to resolve a dispute."

At the time of writing, Amrad was trading at 85c, 30 per cent down on the capital raising share price of $1.15. Circadian shares also slipped yesterday, down 2.4 per cent to $2.40 at 3pm today.