What happened
Shares in UK-based life sciences company Abcam (ABCM) were up 12.7% in the week at 11 a.m. ET. The move comes in an exciting week of news for the company, involving an unhappy founder, a leading U.S. activist investor, and the possibility of a lot of drama in the middle of July.
Abcam provides antibodies and biological tools to the life sciences market. Its customers include publicly funded academic institutions, research institutions, and diagnostic, biotech, and pharma companies. As companies like Danaher have affirmed, there's been a surge in investment in monoclonal antibody-based therapies in recent years, so there's no question Abcam operates in excellent end markets.
However, founder and former director Dr. Jonathan Milner believes the company is underperforming and is calling for an extraordinary general meeting (EGM) on or before July 18. He is also calling for the removal of nonexecutive chairman Peter Allen, CFO Michael Baldock, and nonexecutive director and remuneration committee chair Sally Crawford as directors of the company, and seeking appointment as director and executive chairman.
So what
The strongly worded open letter issued by Milner (owner of a 6.3% stake in the company) on Monday has resonated positively with investors. Meanwhile, The Times reports that activist investor Starboard Value has recently built a 2% stake in the company.
Now what
Milner asserts that the current board has "lost focus" and highlights significant increases in management remuneration at a time when the share price has underperformed. He claims it has failed to execute its five-year plans. He highlights poor execution, enterprise resource planning (ERP) system failure, poor capital allocation, and weak internal controls as the cause of Abcam's problems.
Abcam has promised an update on the potential EGM in due course and claims to have previously had good-faith discussions with Milner in which it offered him a position on the board. Clearly, he wasn't happy with the conditions and is now taking matters further. It could be a very exciting summer at Abcam.
