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Optimer Pharmaceuticals Strips Co-Founder of Chairman Title, Fires Two Execs Over Stock Awards


Michael Chang remains on the drug company's board but directors want him off. Boardroom drama spurred by payment from a Taiwan affiliate.

Optimer Pharmaceuticals (OPTR) stripped co-founder Michael Chang of his chairman title and fired the company's chief financial officer and another executive over stock awards granted by a subsidiary company.

Former Pfizer (PFE) CEO Henry "Hank" McKinnell was named Optimer's new chairman. Although he remains on the board, the directors asked Chang to resign. Chief Financial Officer John D. Prunty and Vice President Youe-Kong Shue were fired, the company said. The shakeup relates to a grant of 1.5 million shares of Optimer Biotechnology to Chang, who sat on the board of the affiliate company, according to an Optimer statement.

Based in Taiwan, Optimer Biotechnology is 43% owned by Optimer and the remaining shares are owned by private investors. The company is developing a breast cancer treatment. Shue was head of the affiliate.

Specifically, Optimer said the management and board shakeup related to Chang's actions as a board member of the Taiwan company "as well as his failure to identify and effectively manage compliance, record keeping and conflict of interest issues in connection" with the grant by Optimer Biotechnology. The payment to Chang was "potentially for the benefit of a third party," the company added.

San Diego-based Optimer isn't elaborating and neither is Chang. Contacted by Minyanville, Chang said he couldn't speak about the matter but chided "the track record" of McKinnell who was ousted as Pfizer CEO in 2006. He called the move to remove him as chairman "board politics" and said it was "all part of the game."

"Clearly, we are disappointed that we had to take these actions," McKinnell said in a statement. "However, the board believes they reflect the importance to the company of good corporate governance practices and that they are in the best interests of the company and its stakeholders."

McKinnell added that the issues were solely related to the Taiwanese affiliate. Optimer said the company's findings were turned over to U.S. authorities for review.

In 2010, Chang received compensation, including stock and option awards, from Optimer of $5.4 million, according to a securities filing. As of March of last year, Chang owned 1.3 million shares, or almost 3% of the company, the filing shows. His wife, Tessie Che, also owned 1.3 million shares as of early 2011. Che was chief operating officer of Optimer until she stepped down in January. Chang said his wife's resignation had nothing to do with the issues surrounding his ouster as chairman.

Chang, 61, was president and CEO of Optimer from 1998 until May 2010 when he was replaced by Pedro Lichtinger. Last year, the company began selling the drug Dificid for hospital infections. (See Optimer Jumps on Dificid Approval) Today, the company said first quarter "gross" revenue jumped 36% to about $16.5 million.

Shares of the company fell 7% to $13.35 in midday trading. The stock is still up 11% on the year.

The company is looking for a new chief financial officer. Optimer's General Counsel Kurt Hartman will be acting CFO in the interim.

Twitter: @brettchase

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