After investor anger led to a swift 10% drop in its stock price, biotech
tried Tuesday to clarify its newly adopted plan allowing company insiders to sell their stock.
On Jan. 11, Biopure said it changed its corporate bylaws to allow company executives and other insiders to enter into approved, predetermined trading plans that would let them unload company stock without running afoul of insider trading liabilities. Chairman and CEO Carl Rausch was set to sell 10,000 shares of Biopure stock every month for the next year, beginning today.
The announcement of the insider selling plan came just one month after Biopure disclosed a significant delay in its efforts to develop a human blood substitute. Questions about the timing of the insider selling plan, combined with fallout from the Enron collapse, contributed to a sharp selloff in Biopure stock on Monday. Shares dropped $1.45, or more than 10%, to $12.20.
On Tuesday, Biopure issued a press release to provide further details about its insider selling plan. The company says none of its executives or insiders are selling stock immediately, including Rausch, who entered into the agreement to "cover personal obligations, including the repayment of loans that were taken out to purchase Biopure stock when the company was privately held."
The company also says that Rausch and one other unnamed company executive won't begin selling until the stock price reaches a minimum of $20 a share. "No other Biopure officers or directors have proposed plans for the sale of company stock," the company said in its press release.
But in the original announcement made Friday, the company said "certain corporate officers have subsequently established such plans, and other insiders may establish plans in the future." Nor did the company offer details about the $20-per-share floor price on any insider selling agreements.
Biopure also did not disclose that certain executives have already sold company stock recently. CFO Francis Murphy sold 1,000 shares of Biopure stock at $13.96 a share on Dec. 31, according to a filing with the
Securities and Exchange Commission
. The sale leaves Murphy, one of the company's top officers, with ownership of just 250 shares of company stock.
Also selling in December was Andrew Wright, Biopure's vice president of veterinary products. He sold 3,970 shares at a price range of $15.68 to $16.10 a share, according to an SEC filing.
As previously reported, Marilyn Jacobs, wife of former senior vice president of medical affairs Edward Jacobs, filed papers with the SEC on Dec. 28, seeking to sell 10,000 shares of Biopure stock. Jacobs resigned from Biopure on Nov. 27.
A Biopure spokesman refused to comment.
Shares of Biopure continued to head lower Tuesday, falling 32 cents to $11.88. At these levels, the company is now in violation of its equity credit line agreement with French bank Societe Generale. Biopure is trying to raise $2.2 million by selling 169,230 shares to the French bank starting Jan. 11 and ending Jan. 17. The company has already raised $6.8 million over the past month.