Nabi Reaches Terms With Loeb

The agreement temporarily halts the attempt by the hedge fund manager to oust top management.
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Nabi Biopharmaceuticals

(NABI)

and a dissident investor announced a truce Monday, allowing two people recommended by the shareholder to join the board.

The agreement temporarily halts the attempt by hedge fund manager Daniel Loeb to oust top management and several board members, including Thomas McLain, Nabi's chairman and CEO. Loeb, who owns 9.5% of Nabi's stock, has been a frequent critic of the company's strategy and has been a vocal advocate for McLain's removal.

"We are pleased that this matter has been resolved in a manner that we believe serves the best interests of all Nabi Biopharmaceuticals shareholders," said McLain said in a prepared statement.

The deal means the two sides "will avoid a costly and disruptive consent solicitation at a time when the company is exploring a full range of

strategic alternatives to enhance shareholder value," he said. A consent solicitation is the tactic Loeb has threatened, seeking to secure a majority of shareholders' votes to replace five directors.

Loeb, who runs the Third Point hedge fund, said adding two board members "will help achieve our objective of maximizing value for all Nabi shareholders."

One new board members is Jason Aryeh, founder and general partner of JALAA Equities LP, which has been another Nabi critic. Aryeh owns about 2% of Nabi's shares. The other new member is Tim Lynch, president and CEO of a start-up drugmaker NeuroStat Pharmaceuticals.

The agreement also calls for Nabi to create a committee to continue Nabi's previously announced decision to explore strategic alternatives. The five-member committee, which includes the two Third Point representatives, will work with Nabi's investment banker,

Banc of America Securities, which was hired in September.

Nabi also will pay up to $250,000 in Third Point's expenses, and Loeb's fund promises to refrain from starting a consent solicitation or a proxy fight prior to Nabi's 2007 annual meeting. Nabi usually hold its annual meeting in mid-May.

Shares of Nabi slipped 6 cents to $6.54.

The agreement is remarkably similar to a deal that Third Point negotiated with another drugmaker whose performance, practices and top management had been pilloried by Loeb. Last year, Loeb, and another hedge fund manager, David M. Knott, went after

Ligand Pharmaceuticals

(LGND) - Get Report

even as the company was hiring an investment banking firm to explore options.

Knott's firm also has chimed in on Loeb's effort to remove Nabi's McLain. Knott controls about 9.8% of Nabi's stock.

Loeb threatened a proxy fight against Ligand,

but they settled in December. Loeb added three people on the Ligand board, including himself, got Ligand to pay up to $475,000 to Third Point for certain expenses and promised not to solicit proxies or take other stockholder action for six months. Aryeh was added to the Ligand board last month.

In July, Ligand's chairman and CEO, David E. Robinson, the object of Loeb's disaffection, resigned. In September, Ligand announced

a major change in strategy, selling all of its drugs so it could focus on developing compounds that it could license to partners.

The Ligand experience was cited by Loeb, in one of his many attacks on Nabi filed with the

Securities and Exchange Commission

. "Mr. McLain should also note that while the scientific staff at Ligand is intact, former CEO David Robinson resigned in July," said a Sept. 14 letter filed with the SEC.