InVivo (NVIV) President, CEO and CFO Frank Reynolds Resigns; Michael J. Astrue In As Interim CEO and Sean Moran in As Acting CFO
Following our coverage of InVivo (NVIV) delaying the listing of its publicly traded stock in “Corporate Governance Gap”, published earlier this month, the company announced on August 22nd that Chairman, CEO and CFO Francis Reynolds had resigned to due to still unspecified “health concerns”, which sent the company’s stock plummeting nearly 30% the next day on August 23rd.
The Cambridge, Mass. based biotechnology firm, which is developing a bio-polymer scaffold to help treat traumatic spinal cord injuries has named Michael Astrue as interim CEO as InVivo seeks a more permanent replacement. Astrue is currently chairman of the board at Vivus Inc., a small biotech in Mountain View, Calif.
Astrue’s experience in taking InVivo to the next level should be invaluable, especially in terms of justifying valuation of the company; Vivus just completed a vicious proxy battle with their largest investor, First Manhattan Co., only reaching a settlement last month. InVivo has also named Sean Moran, currently the company’s director of finance as acting CFO.
“We believe that Michael’s extensive industry expertise, as well as his leadership abilities, position him strongly to lead InVivo during this important transition,” s Sir Richard Roberts, Ph.D., InVivo Director and Nobel Laureate in Medicine and Physiology said regarding Mr. Astrue’s appointment.
“The Board has full confidence that Mr. Astrue will provide excellent leadership to a talented team and focus the company on its goals of advancing scientific and clinical progress towards commercialization of groundbreaking technologies for spinal cord injuries
Although critics point to the recent “uplifting” delay that would take the company one step closer to being listed on a national stock exchange, the blow of not having InVivo co-founder and former spinal injury patient Reynolds to help promote the company not only presents a challenge but also presents a new opportunity for the company and for management to promote a new vision and a new direction for the company
New Visions and New Opportunities
Robert Langer, Sc.D., co-Founder of InVivo who is also a member of the InVivo Scientific Advisory Board, and a world renowned inventor and the David H. Koch Institute Professor at the Massachusetts Institute of Technology commented on his optimism that the sudden and unfortunate departure of Mr. Reynolds will not affect the company.
“The science, engineering and clinical work at InVivo have been outstanding and will continue to be outstanding with the team we have in place at InVivo.” according to Dr. Langer.
In addition the differentiation of executive functions that were previously held by Mr. Reynolds may also help to clear up potential issues in corporate governance that InVivo may encounter along the way. Many smaller companies are facing challenges with uplisting, as much due to lack of financial strength as it is to more attention being cast on corporate governance among trading exchanges worldwide.
Financially, the company is still in great shape. With over $20 million in cash (some $16 million of that raised through a warrant exercise in June) and just under $2 million in debt as of the company’s quarterly Q2 earnings report, InVivo does not seem to be struggling financially. In addition clinical studies regarding the company’s flagship biopolymer scaffolding designed to truly measure the long-hyped and promising results of the treatment will be underway later this year, aided by the IDE exemption granted by the FDA in April.
In all, the opportunity for InVivo is present. Although the absence of Mr. Reynolds as an ardent spokesperson for the company will be missed, the differentiation of functions between new CEO Astrue and new CFO Moran will be a boost for the company’s push to be uplisted to a national stock exchange. Value is also still yet to be unlocked from any revenue the company may receive down the line as part of a joint venture with a development partner or even as a potential M&A target.
Long term, InVivo has a viable opportunity as an undervalued company. As the stock starts to come back, a prime opportunity to take advantage of a revolutionary and undervalued biotech company has emerged. As InVivo’s new management starts to take over, the view is not just to get the company only onto a new stock exchange but to also become one of the pioneers in an orphan market that could potentially worth billions in revenue down the line.