The way this is supposed to work is when I come up with a nut case idea, rational people criticise my logic, and I'm forced to search high and low to justify my argument. Are long term shareholders sharing my delusion?( at least I've admitted I've been sick, and I can prove it to anyone living in Heraklion).
I, suppose I have to wait for PortableAlpha to argue that Biota management and Peter Cook are not simply parasites who are solely linked to Biota for the purpose of making management RICH, Peter Cook RICH, and colluding with GSK, Roche,and Biota management covering each others back ( do I even have to mention this clearly excludes shareholders) and getting RICH together. Lets face it, smart management that is morally bankrupt wouldn't take(didn't take) long to realise there's easier money to be made capitulating with the big pharmaceuticals against the shareholders, instead of doing their job and joining shareholders to struggle and fight for their well earned reward after years of shareholders sweating blood with cash support for R&D , in contrast, Biota management swanned in late and self righteously gorging each other on higher salaries, perks and free LTO's.
Wasn't it Ms Barbara Gibson who said "Let them eat cake" when the Biota shareholders were starving to death from lack of bread?..........Probably not, but at least some of the Biota board realised the gravy train was being questioned by the shareholders, and being financial wizards they resigned (actually,questioned mostly my me, and not at all by PortableAlpha). If it was good enough for the French aristocracy to be guillotined, it's good enough for the current Biota management board.
The reason I couldn't believe Peter Cook folded so completely against the GSK lawsuit was because I had not allowed for the fact that Biota management had a comfortable lifestyle(already chummy with GSK, and probably Roche)that was put to risk if Biota lost the law suit,OR EVEN UPSET GSK.
In contrast, for shareholders, the lawsuit gave shareholders HOPE, we had ALREADY LOST ALL INCOME(we still have).
Finally, the injustice that shareholders had suffered for an eternity ( over twenty years) would be made public to the world in a court of law. Peter Molley and the original law team leading the lawsuit had reams of documents, each document confirmed GSK bias in favour of vaccines and Tamiflu, and each announcement from the Biota CEO had the settlement claim for more and more money compensation. There was even a precedent by Gilead suing Roche that showed how a bastard pharmaceutical would be punished in a legal dispute to correct unfair behaviour.
For a while Biota shareholders thought that the court case would be just a formality, resulting in righteous reward.
AND THEN PETER COOK HAD A MEETING WITH GSK, and announced we'd been lucky, GSK wanted to give us $100 million to avoid the public scrutiny of GSK's behaviour detailed in the evidence at court and that should have earned shareholders more than $500 million($500,000,000), but Peter Cook had fought for JACK-SHIT and that's what Peter Cook won for us (for himself Peter Cook settled for millions of free BTA options* * Each BTA share has cost me about $1.50 (about 60,000 shares). I (and many other shareholders) have put more money into Biota than all the Biota management parasites combined, and yet all they have to do is give each other free options to keep us powerless.
Did anyone else think to drop in on lawyers in Melbourne bar clubs on Friday nights about a year ago? There was a disappointed and anguished Biota legal team who thought winning should have been easy; an astonished and bemused good fortune for the GSK legal team who thought winning should have been a struggle, and taken longer;and the gutless wonder barrister who provided legal advice for the compact new Biota legal team (version two), who included a standard note designed to protect his mistakes by warning Biota management of everything that could go wrong. The barrister was surprised that the warning was all the excuse Biota management needed to drop the law suit and keep GSK happy.
Read this alternative, legally acceptable version,
Biota's bitter pill for investors MICHAEL WEST July 24, 2008
Correction
This article said that former biotech star Biota had received legal advice from Melbourne barristers Jeff Sher, QC, and Stewart Anderson, SC. While it is correct that both men gave advice to the company over its long-running legal battle with drug giant GlaxoSmithKline, neither Mr Sher nor Mr Anderson was consulted by Biotech over the board's decision to knock back a $75 million settlement offer made by GlaxoSmithKline in October 2006. We apologise if that incorrect inference was drawn by any readers.
- July 29, 2008
When the former star of the Australian biotech sector, Biota, told the market earlier this week it had settled its long-running legal battle with drug giant GlaxoSmithKline for $20 million, it conveniently neglected to mention GSK had already offered it $100 million.
Biota was suing GSK for breach of contract, claiming the drug company had failed to use best endeavours to market its anti-viral flu treatment, Relenza. In April last year, the Biota board knocked back a $75 million settlement offer from GSK which included an offer to pay costs on top.
As Biota is believed to have run up $35 million to $40 million in legal costs fighting the four-year battle, the decision was an expensive bungle for the company.
Armed with another bullish opinion from counsel, having resolved to fight on, and having told the market its claim was worth $704 million, Biota and its solicitors Maurice Blackburn took advice from an another barrister. This time, the advice from Sydney QC John Sackar was that their case against the drug giant was riskier than they had thought.
In the Biota camp there was now a fear that, should they go to court and receive a judgement lower than the original offer from GSK, the company could be up for all of GSK's costs incurred subsequent to the date of the earlier offer. They panicked.
Settlement
On Monday, the Melbourne-based biotech group announced that it had settled for a mere $20 million. Adding insult to injury Biota has a success fee arrangement with its lawyers from Maurice Blackburn. Biota denies that any success fee was payable so it may have been dumped, although Biota could not confirm this.
It is rather embarrassing.
Chief executive Peter Cook said there were ''a number of settlement discussions over the 4-year course of the litigation; the most recent was in 2006.''
Almost a year ago in its release to the ASX of July 31, Biota announced it had increased its damages claim from $564 million to $704 million. A $20 million settlement represents 3 cents in the dollar.
The expectation created in the market - that Biota had a strong case and would achieve a settlement in the hundreds of millions of dollars - had underpinned the stock and was vital to the company's marketing to investors.
Until this year, Biota had taken legal advice from Maurice Blackburn lawyer Bruce Goldman, and two Melbourne Senior Counsels Jeffrey Sher and Stewart Anderson. Maurice Blackburn and Goldman's fees are believed to have exceeded $15 million. Overall, the dispute is believed to have cost Biota as much as $40 million.
Biota spun the outcome thus in its press release this week: ''Biota's chairman, Mr John Grant, said that in striking the agreement the Biota board had taken some hard decisions. Recent advice, sought following the May postponement of the scheduled trial date, indicated a significant lengthening of overall time-scales, including of the trial itself and a consequent large escalation in costs and risks.''
Mr Grant said ''That advice required us to review rigorously all aspects of the litigation in a new light including the impact of current and further possible delays and the growing scale and complexity of the litigation.''
Peter Cook today added to the explanation. The discussions in 2006 with GSK ''strengthened Biota's view of its case and encouraged the company to continue with further discovery of GSK's documents''.
''Biota's position was that there would be insufficient certainty to agree a settlement amount until the discovery process was largely complete and that was not achieved until this year,'' Mr Cook said, adding that there was no settlement discussion this year until the mediation this July.
He also cited the trial date delay as a factor, as it had introduced ''significant uncertainties in time and cost which the company was obliged to take into account and did so.''
Bitter pill
Shareholders are the losers in the battle over Relenza.
The big winners are Biota's lawyers, Maurice Blackburn and Deacons who represented GSK in the case. Deacons' costs are believed to be in the vicinity of $80 million.
Biota brought legal proceedings against GSK in May 2004 in the Victorian Supreme Court. It claimed GSK had failed to use its best endeavours to promote and support Relenza and was therefore in breach of contract.
Biota originally claimed damages at between $308 million and $430 million but ratcheted its ambit claim up to $704 million last year.
Biota had been the star of the Australian biotech sector in the 1990s having, through its ''rational drug design'' research found a cure for the flu.
The euphoria over the development of Relenza in scientific and biotech investment circles the stock rose as high as $9.10 on February 24, 1999 (although it shed half that price the following day). The stock is down about 43% this year.
Biota struck a landmark royalties deal with Glaxo, then Smith Klein Beecham. SKB would take the product through Phase III clinical trials, take the product to market and pay a royalty of 7% back to Biota.
Hopes were high for a cure for the flu. But sales never matched expectations. One problem was once you know you have the flu, you have it anyway, and Relenza could only diminish the impact of the virus.
The other problem was that Biota's product was a diskhaler - like an asthma inhaler - and when rival pharmaceutical giant Roche came out with its Tamiflu pill a year or so after Relenza hit the market, consumers exercised their preference for a pill over an inhaler.
Nonetheless, there was strong demand to come as governments around the world bought Tamiflu and Relenza, and stockpiled it in the wake of the bird flu outbreak.
Fears of a pandemic have underpinned sales but as is so often the case with biotech stocks, the commercial reality did not live up to the hype of development.
And, as the company told us today, for the June quarter, royalties from GSK to Biota were $400,000 on sales of $6.2 million, and some $21.3 million for the year.
