Angry shareholders are calling for an investigation into the conduct of collapsed biotechnology firm Henderson Morley following the sale of some of its assets to former directors.
Shares at the Moseley-based firm, which developed anti-viral drugs, vaccines and biological products, were suspended last month, after a funding crisis saw it plunge into administration.
Some investors have lost six-figure sums because of the collapse, with hardly any prospect that they will get any of their money back.
Just days after Henderson Morley went into administration on September 8, directors Andrew Knight and Ian Pardoe bought the assets under another company called Dawnglow. Dawnglow agreed a deal for £105,000 for the firm’s patents and a further £15,000 for laboratory equipment, office equipment and furniture.
But shareholders claim they were misled about the value of the assets and have criticised the directors for the remuneration packages they were awarded. Figures reveal that the highest-paid director received £136,904 for the year to April 2009.
Tom Winnifrith, of Rivington Street Holdings, owner of Sharecrazy, which was paid to do Henderson Morley’s PR and latterly act as its broker, said it had also lost money.
He said in a blog: “Creditors will probably get nothing once the preferred creditor A Knight and the administrator have been paid. In effect Andrew Knight has bought the assets – not the liabilities – of Henderson Morley, a company that has over the years raised almost £10 million, for £120,000. Over the years Knight has told all of us how valuable his IP was. Yet the administrator says that an independent report it commissioned said it was worth just £50,000 to £250,000. How does Knight explain its sudden precipitous loss of value?”
He added: “The administrator reveals in a letter to creditors that a number of IP patents lapsed on August 23 – when Henderson shares were still trading – with more lapsing on August 30 and in mid September. Why did Henderson not, as it should have done, notify the market of this?”
It is understood administrator Chantrey Vellacott was first approached by Thomas Horton solicitors acting for Henderson Morley on August 6 but was formally appointed on September 8 – the same day Dawnglow made the offer.
A letter from joint administrator Craig Povey, to creditors explained why they weren’t able to continue trading the business and sell it as a going concern.
It said: “Without a substantial injection of funds being put into the companies at day one of the administrators, continued trading would not have been possible. It has been noted that the cashburn was approximately £90,000 per month with little or no chance of revenue generation in the short to medium term, as the companies were still at pre-revenue stage.”
One shareholder, who asked to remain anonymous, said: “All along, what you find is the company made very upbeat statements about their portfolio of products and they would lead people to believe that things were closer than they actually were to closing a deal.
“On one occasion they came out with a positive announcement about one of their products and within 30 minutes they came out with something negative relating to another product.”
The shareholder added that he believed that the directors’ renumeration was “disproportionate to the size of the company”.
He added: “I retained a small shareholding because I actually thought the products they had were of some value. The final straw is they were trying to tell shareholders that got these valuable prospects yet they bought them for next to nothing. Some of their patents were running out but they didn’t tell shareholders they had to renew them.
“Shareholders were led to believe they had a valuable portfolio of products and that a lot of money could be made then all of a sudden they are virtually worthless.”
The Financial Services Authority, AIM Team and the Department for Business Innovation and Skills said it could not confirm or deny whether an investigation would be carried out.
Mr Knight was not available when contacted by the Birmingham Post.