Top officers and directors of Human Genome Sciences cashed out their stock options this week, after the Rockville biotech’s next owner, GlaxoSmithKline, replaced them on Monday.
Among them was H. Thomas Watkins, former CEO and director, who led the company for eight years. His payout comes to $20.97 million, according to a regulatory filing. That’s on top of a severance package that includes two years of his $740,000 annual salary and other compensation.
Only three HGS directors are staying for now, with most of the board replaced by Glaxo candidates, including company officers.
The London pharma giant agreed last month to buy its longtime partner for $3.6 billion, including about $600 million in cash and debt. As of Monday, Glaxo owned 79 percent of HGS shares.
Deirdre Connelly, president of Glaxo’s North American pharmaceuticals division, is succeeding Watkins as CEO and president. Connelly, a former executive at Eli Lilly, has been with Glaxo since 2009 and is a member of its corporate executive team.
Connelly and other Glaxo officials declined requests for comment, including any information on plans for the Rockville location and its work force.
Watkins informed employees through a letter Monday that the change was not unexpected and referred to the resignations as “a necessary and well understood part of the acquisition process,” according to The Washington Post.
“I and all of the other members of the HGS senior management team will remain part of HGS through at least the end of August,” Watkins said in the letter. “A number of our executive officers will remain involved in the integration process beyond that time, possibly through the end of the year.”
Watkins has played a major role in Maryland’s biotech community during his tenure with HGS, including as chairman of the Maryland Life Sciences Advisory Board. He also just started his second year as chairman of the Biotechnology Industry Organization. Watkins will continue as interim chairman for BIO, said George Goodno, a spokesman for the global industry group.
“One can't say enough about what Tom has brought to the Maryland biotech community during his tenure as CEO of HGS,” Kenneth Carter, a serial biotech entrepreneur and president and CEO at NexImmune in Gaithersburg, said in an email to The Gazette.
He emphasized Watkins led the effort that spawned the state’s BioMaryland 2020 plan that called for more than $1.3 billion in structural investments to grow the state’s bioscience cluster within the decade. Watkins also has been with the Life Sciences Advisory Board since its creation in 2007.
“Tom has been a great asset to the Maryland life science community. His support has been evident in at all levels; with startups, with mature companies and with public and private groups that support and nurture the community,” Robert Rosenbaum, executive director of the Maryland Technology Development Corp., wrote in an email to The Gazette.
“It’s not unexpected, since these things happen when mergers happen, but I do think it’s a loss for Maryland’s biotech community,” said Rachel King, CEO of GlycoMimetics in Gaithersburg and a board member with the MdBio Foundation, a division of the Tech Council of Maryland.
King said Watkins always has brought “positivity” to the state’s bioscience community and has been active in its growth.
Watkins, who could not be reached for comment, will continue to draw his $740,000 annual salary for the next two years as part of his severance package, according to an HGS regulatory filing. HGS representatives did not respond to requests for comment.
Watkins “has a tremendous amount of experience and accomplishments behind him, so he will have a lot of choices as he goes forward,” King said. “I hope he stays in Maryland.”
Carter pointed out that several other high-profile bioscience executives who left their acquired companies have continued to have strong presences in the local biotech community.
David Mott, former CEO of MedImmune in Gaithersburg, joined venture capital firm New Enterprise Associates in Chevy Chase and recently helped create BioHealth Innovation, a Rockville nonprofit designed to spur bioscience industry growth in the region. Evan Jones, former CEO of Digene, also has remained actively involved in the local biotech community, Carter said. Their two companies were acquired by AstraZeneca of the U.K. and Qiagen of the Netherlands, respectively.
The three board members remaining with HGS are Argeris N. Karabelas, Augustine Lawlor and Gregory Norden.
Several of the new directors hold prominent Glaxo positions: Secretary Daniel Troy is the London company’s senior vice president and general counsel and David Redfern is chief strategy officer.
HGS offered $35 per share in 2010
When the HGS acquisition plan was announced July 16, stock analysts expressed disappointment. Indeed, the $14.25 per share deal pales in comparison with an offer for $35 per share another company presented to HGS on Aug. 3, 2010, according to regulatory filings.
This was prior to the Food and Drug Administration’s approval of HGS’ lupus treatment, Benlysta, in March 2011. On Aug. 2, 2010, HGS stock had closed at $26.33.
Reuters, citing confidential sources, has reported the 2010 bidder was California biotech giant Amgen, which would not comment.
Given the anticipated approval of Benlysta, HGS executives determined accepting the $35 per share offer was not in the company’s best interests, according to the filings. Its best strategy, instead, was to remain an independent company.
However, Benlysta sales have failed to meet analyst’s expectations and the company’s stock price had dropped to $7 by April, when Glaxo made its initial, unsolicited offer of $13 per share, or $2.6 billion. HGS resisted Glaxo’s takeover attempts, even instituting a “poison pill” to thwart hostile buyout efforts.
But after several months of inviting other bidders to make offers, HGS last month decided to take up Glaxo on its new offer of $14.25 per share.
Besides Benlysta, the companies have teamed up for years to develop treatments for diabetes and cardiovascular disease. Those treatments are working their way through clinical trials.