Top executives at Lexington drug company resign
BOSTON – Two executives, who led a company that won federal regulatory approval for a drug that targets a specific racial group, resigned Tuesday without explanation.The move followed disappointing initial sales for the heart failure medication BiDil, which is approved for use among blacks only. Stock of the Lexington company, NitroMed Inc., rose 7 percent amid rumors that the 100-employee company could be a takeover target.A news release from NitroMed did not say why CEO and President Michael Loberg and Chief Financial Officer Lawrence Bloch were stepping down.NitroMed board Chairman Jerry Karabelas will serve as interim CEO, while former Millennium Pharmaceuticals Inc. executive Kenneth Bate was named NitroMed’s CFO and chief operating officer on a permanent basis.Jane Kramer, a spokeswoman for NitroMed, declined to comment on the reasons for the moves but said the resignations were “a mutual decision among Drs. Bloch, Loberg and the board of directors.”Kramer wouldn’t comment on plans to find a permanent successor for Loberg, who had been the CEO since 1997. NitroMed planned to hold a conference call Wednesday with industry analysts.Shares of NitroMed rose 58 cents to $8.41 in afternoon trading on the Nasdaq Stock Market, where the stock traded as high as $24.45 last summer after BiDil’s approval. Since then, NitroMed’s shares have lost nearly two-thirds of their value.BiDil is the first commercial product for the 23-year-old company. NitroMed has never made a quarterly profit since its initial public offering in 2003, and on March 2 reported a fourth-quarter loss of $31.6 million – more than three times the loss in the same period a year earlier.Loberg has acknowledged disappointment in initial sales of BiDil, largely because of difficulty persuading pharmacy benefit plans to approve low patient co-payments for the drug.Despite the recent poor results, Liana Moussatos, an analyst with Pacific Growth Equities, said Tuesday’s resignations came as “a total surprise.””Because they don’t have a replacement CEO who’s permanent, I think this was sudden and unexpected internally,” Moussatos said.Moussatos attributed Tuesday’s stock rise to market speculation that NitroMed could be ripe for a takeover, in part because of its patents involving nitric oxide – a key substance in heart health – that could make it an attractive target.”They’re speculating that NitroMed could be a takeover target with the stock at this low valuation and at a time of management transition,” she said.Moussatos said that one potential suitor could be Merck & Co. – a company that collaborated with the far-smaller NitroMed starting in 2003 to develop nitric oxide-based treatments for cardiovascular and inflammatory diseases.Kramer declined to comment on the possibility of a takeover, and a spokesman at Whitehouse Station, N.J.-based Merck did not immediately return a phone call.The researchers who developed BiDil did not start out looking for a drug that worked better for a particular racial group. After reviewing earlier studies indicating black participants in clinical trials benefited more from taking the drug than those of other races, NitroMed began its own study involving only blacks.That study revealed a 43 percent reduction in deaths among black patients taking BiDil along with standard heart failure drugs, compared with a control group who took standard therapy along with a placebo.—On the Net:NitroMed Inc.: http://www.nitromed.comVail, Colorado
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