Rebel shareholders in ML Laboratories, the struggling biotech company, are mounting a boardroom coup to have the executive chairman and other non-executive directors removed.
The company, whose research includes treatments for respiratory illnesses, issued a statement yesterday confirming that "a number of parties" were putting together a formal demand for "one or more" of ML's board to step down and be replaced by an external candidate.
Dissident shareholders are frustrated by the lack of progress in the company since it ran out of capital early last year and was forced to raise more than £14m in an emergency rights issue. Stuart Sim has been the executive chairman of ML since 2002, when Kevin Leech quit the company. He provided initial funding for the company but the serial entrepreneur was separately declared bankrupt.
David Kirch, a Jersey-based property investor, is believed to be leading the shareholder assault. He has been building a stake in ML and owns nearly 12 per cent of the company.
Mr Kirch declined to comment on the situation, but one significant shareholder said: "Following the fund-raising last year, shareholders want change. Many are not very happy with the board and believe a new team would reinvigorate the business."
Another shareholder said: "There is huge dissatisfaction with this company in the City. There has been very little action to improve its performance."
ML announced last month its losses had widened to £9m for the year, from a loss of £2.6m in 2003. Its shares have declined in the past four years, from highs of 124p to lows of 9p. Yesterday they closed up 0.25p at 19.5p.
City institutions such as Henderson, Gartmore and Hermes have sold out of their ML shareholdings in recent months. They are believed to have lost faith in the company's prospects and its management. Mr Sim has pledged to make the company profitable by the end of the year.
But shareholders are understood to be disgruntled with Mr Sim's pay package. He earned nearly £400,000 in 2003 when the company made a loss. Details of his salary for 2004 will be revealed imminently, when ML's latest annual report is published. ML said it had not received a formal written proposal from shareholders. The rebels are likely to request an extraordinary meeting to demand the directors step down.
The company, which is developing products such as treatments to reduce complications after surgery and drugs for kidney problems and various cancers, was one of the UK's worst-performing biotech companies. One of its more promising product developments is an inhaler which aims to administerdrugs more efficiently. It has licensed several to pharmaceutical companies.