BioWorld International Correspondent

SYDNEY, Australia - A major board fight in one of Australia's largest biotech companies has been settled peacefully by the parties involved, with the resignation and replacement of two board members and a change in the company's chairman. The deal resulted in the cancellation of a shareholders' meeting to vote on board changes hours before it was due to be held.

Both the incumbent directors of Amrad Holdings Ltd. in Melbourne and the dissident shareholders representing other major, listed biotechs welcomed the deal as a way of preventing what may have been a deadlocked, "dysfunctional" board.

Instead, both sides agreed that they can work with the new board created as part of a deal brokered in part through the treasurer (finance minister) of the Victorian state government, John Brumby. For historical reasons, the state government still holds 15.3 percent of Amrad.

A string of bad news announcements by Amrad, including two major pharmaceutical companies abandoning development work on its products and a poor Phase II result for another project, helped start the board fight in early April.

Shareholders led by another longstanding biotech company, Circadian Ltd. in Melbourne, which controls 19.3 percent of Amrad, decided that the board needed a shakeup. Fibre Optics Pty. Ltd., a wholly owned subsidiary of Circadian that owns the Amrad shares, served notice that it wanted to remove three directors and replace them with its own nominees.

The three directors targeted were Helen Cameron, chairman John Mills and Jeremy Curnock Cook, but not the comparatively recently appointed managing director, Sandra Webb, or two other directors.

After both sides lobbied the state treasurer over the uncommitted government holdings, the compromise achieved was for the resignation of Curnock Cook and the untargeted Hank Nordhoff from the board, and Mills stepping down as chairman and becoming deputy chairman. Circadian-Fibre Optics nominee Olaf O'Duill will move onto the board as chairman, with the other board spot to be taken by fellow nominee Bob Moses.

Mills told BioWorld International that under the company's constitution both men could be appointed as directors until the regular shareholders meeting, and that the deal has avoided a possible stalemate on the board.

O'Duill, a man of considerable experience with biotech companies, has already been introduced to the company and has started to learn about it, he said.

Graeme Kaufman, a director of Fibre Optics and Circadian, said the deal has avoided a possibly "dysfunctional" board. He said that O'Duill will make major changes to Amrad but will take time to learn about the company before making those changes.