The war between the management of Bioniche Life Sciences (TSX:BNC) and a group of shareholders unhappy with them is heating up, as the company’s stock alternates between up and down days.
Today Bioniche announced that, with the advice of legal council, it had rejected the call for an early shareholders meeting from the group.
Bioniche says the “second requisition” submitted by former Biovail CEO Bill Wells and former Biovail senior-exec Greg Gubitz does not require them to to call a special shareholders meeting under the Canada Business Corporations Act.
In April, the men wrote an open letter to Bioniche Chairman James Rae, pointing out that despite a share price that has lost 96% of its value since 1996, the same CEO, Graeme McRae, has remained the helm of the company. Under his leadership, noted the letter, Bioniche has never turned a profit.
Bioniche management said it was taking steps to address the poor performance of its stock, and engaged an investment bank to review opportunities it said were on the table. One of the conclusions it came to was to divest itself of its 34 year-old animal health business. “Three large animal health companies have now expressed interest, in writing, in executing a purchase of the company’s animal health business,” said Chairman Rae.
The dissident group immediately responded, offering that that would be a terrible idea.
“The jewel in Bioniche’s crown is the animal health business. It is the only business in the company that produces revenues and positive cash flows and is highly scalable, ” said Wells. “The remaining development programs, centered around Econiche and Urocidin, produce no revenues, burn cash and have to date destroyed shareholder value with no payoff visible for years, if ever. Now Bioniche’s management and board have decided to divest the animal health business, the core of the company, leaving shareholders with an interest in two non-revenue producing products with a troubled development history and large, idle manufacturing facilities.”
Meanwhile, Bioniche’s board has said its shareholder meeting will take place on its scheduled meeting date of Nov. 5, 2013.
Shares of Bioniche Life Sciences closed today down 4.3% to $.335.