It seems that a fight is looming over a seat on Echo Therapeutics Inc.'s board of directors.
The company's largest shareholder, an investor group led by Platinum Management (NY), LLC, which owns approximately 19.9% of Echo's common stock, is not happy with current management. Platinum Management has put forth its own candidate, Shepard M. Goldberg, in opposition to current director and interim CEO Robert F. Doman, in advance of Echo's annual shareholder meeting.
The Philadelphia Business Journal's John George reports that Platinum Management sent a letter to shareholders in which it said it "can no longer sit idly by while stockholders continue to suffer under the direction of the current board." The letter continued, George said, saying that because of its "continued frustration with the performance of Echo," Platinum Management is urging stockholders to elect Shepard M. Goldberg to the board.
Echo, for its part, released a statement supporting Doman as "our highly qualified and very experienced director" and noting Doman's "over 30 years of executive level ... experience with specific concentrations in medical devices and pharmaceuticals."
According to Echo's release, Shepard M. Goldberg is "a first cousin and long-time business associate of Michael M. Goldberg, MD, a current member of the Echo Board." The release continues, saying that although Platinum Management is entitled to designate one director according to a stock purchase agreement, Michael M. Goldberg is that director.
Echo's release goes on, reminding shareholders that Platinum Management had only designated Michael M. Goldberg after "the Echo Board informed Platinum Partners that, after interviewing Shepard M. Goldberg and reviewing his credentials, it did not believe that Shepard M. Goldberg met the Echo Board's criteria for Board membership."
Philadelphia-based Echo makes transdermal skin permeation and diagnostic medical devices. The company is developing its Symphony CGM system, which is a needle-free wireless continuous glucose monitoring system for use in hospital critical care units; and Symphony SkinPrep system, a component of Symphony for enhanced skin permeation that enables extraction of analytes, such as glucose.
But the reasons for Platinum Management's frustration may become apparent when one looks at the numbers. The company posted a net loss of $19.1 million in 2013, after a $12.3 million loss in 2012. At market close on April 24, Echo's stock was trading at $3.20 per share, down from a 52-week high of $6.80.
Echo has filed revised proxy materials with the Securities and Exchange Commission (SEC). To allow sufficient time for stockholders to receive and review Echo's revised proxy materials, the company has postponed its annual shareholder meeting to an as-yet unannounced date and will set a new record date for determining stockholders entitled to notice of, and to vote at, the 2014 Annual Meeting. Echo says it will announce both such dates prior to its mailing to stockholders of the revised proxy materials.
