This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

At NeoPharm, the Buck Stops Before Kapoor

NeoPharm's (NEOL) largest shareholder, founder and recently deposed chairman John Kapoor believes the drug company's four independent directors are doing a poor job. So he's asking shareholders to vote them out; in their places, Kapoor wants to install his own handpicked slate of directors.

While it's hard to find good things to say about the stewardship of NeoPharm's current board, Kapoor is no white knight, either. He's just as culpable for the company's current woes as anyone else, which should give investors pause before they decide whether to put him back in charge.

To this point, NeoPharm is a drug company that has been better at losing money and attracting the attention of the Securities and Exchange Commission vs. actually developing any of the cancer-fighting drugs in its pipeline. Kapoor and his wife collectively own 21.7% of NeoPharm.

In May, a panel of arbitrators dismissed a contract dispute between NeoPharm and Pharmacia -- now Pfizer (PFE) -- in which NeoPharm was seeking hundreds of millions of dollars in damages. The company got nothing, but public comments made by NeoPharm regarding this dispute prompted the SEC to initiate a formal investigation, which is still ongoing. In June, CEO Jim Hussey resigned and Kapoor was forced out of his job as the company's chairman, although he remained a director.

NeoPharm shares have plunged from a 52-week high of $22.70 to a low of $4.66 on Aug. 24. The stock closed Wednesday down 26 cents, or 4%, to $6.24.

On Sept. 2, Kapoor filed a preliminary consent statement with the SEC, claiming that four of NeoPharm's six directors have failed in their duty to oversee management. Specifically, Kapoor claims that NeoPharm is burning too much cash and is too slow in developing its lead brain tumor drug, IL-13PE38. (For my previous take on why this drug and its ongoing phase III study is high risk, click here .)

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs