“Vicious” press coverage is part of the reason that high-profile biotech company Kadmon has had a disappointing debut on the public markets, CEO Harlan Waksal told CNBC Wednesday.
Just last month, Kadmon was eyeing an initial public offering that management hoped would raise $140 million. But the company raised just $75 million. And its share price slumped after debuting on the New York Stock Exchange Wednesday. Shares were priced at $12 initially, but had fallen to nearly $10 by midday.
Waksal said part of the problem was press coverage critical of him and his brother, Sam, who founded the company. STAT, for one, reported this week about past criminal charges against Sam and Harlan Waksal. The story also examined pending lawsuits accusing Sam Waksal and Kadmon of scamming investors. And it disclosed that the company has burned through cash at a stunning rate.
“It’s been a lot of focus on the Waksal brothers, on history, rather than on the present,” Harlan Waksal said. “And the present is what’s important.”
Kadmon, which is burdened with more than $200 million in debt, is seeking to develop therapies for several diseases, including autoimmune disorders and cancer.
Founder Sam Waksal is widely considered a smart scientist who can spot promising drugs; he helped develop a widely used treatment for colorectal cancer. Yet he spent five years in federal prison for insider trading and other charges related to his former company, ImClone.
Harlan called his brother “extraordinary and complicated in many ways.”
After the insider trading charge, the Securities and Exchange Commission barred Sam from holding a leadership role at a public company. So he stepped down in February, leaving the company in the hands of his brother, Harlan — who was himself charged with drug trafficking in 1981 after federal agents searched him in an airport and found cocaine in his luggage and his underwear. Those charges were dismissed after a judge ruled that the search was inappropriate.
Harlan said he recognized the baggage associated with the family name might make it hard to get his company off the ground. “This was the hardest decision, for me to get involved with the company,” he said.
Making matters worse, he said, was that the biotech market has been shaky, “quickly and easily spooked.”
“It doesn’t take a lot to cause problems,” he said.
But Harlan said he took the reins because his brother “needed someone in there that he could trust.” Moving forward, Kadmon will make it a priority to make sure there’s an “appropriate succession planning in place,” he said.
“If I’m a detriment to this company, I’ll make the appropriate changes,” he said.