The directors of XTL Biopharmaceuticals, the Israeli drug development company which has come under attack from rebel shareholders, have agreed to waive potentially lucrative options packages and promised to slash costs across the company.
A showdown at the group's annual general meeting yesterday was described as "an honourable draw" by analysts, after shareholders rejected a rebel plan to oust the existing board and consider shutting the company down.
Shore Capital, a UK investment boutique, had built up a 20 per cent stake and had proposed a number of its own candidates to take control of the group, but it was defeated by 69 per cent to 31 per cent.
However, the existing board, led by president and chief executive Martin Becker, has promised to come up with proposals to reduce a cash burn rate that currently stands at £1m a month. The group, which raised £31m in a flotation in 2000 to spend on developing new treatments for hepatitis C, will otherwise run out of money within 18 months.
In behind the scenes meetings with shareholders before yesterday's meeting in Tel Aviv, Mr Becker agreed to cut back on administrative costs and axe some early stage research projects. He will focus resources on drugs that are closer to launch.
The company also withdrew a string of the most controversial resolutions at yesterday's AGM, including the grant of 500,000 share options to Mr Becker and 350,000 options to three other executives. It also did not ask shareholders to give up their right to block new share issues, which the board had previously argued was necessary to enable it to raise emergency cash.
Howard Shore, the chairman of the investment boutique, welcomed Mr Becker's promise to cut cash burn and to consider raising money from licensing out some of the group's assets. Mr Shore said: "A large number of the shareholders made the effort to thank us personally for taking an active stance which has led to these changes."
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