Aurinia Pharmaceuticals offered an olive branch to a group of shareholders clamoring for change. It’s shrinking its board by two seats, and it added activist investor Kevin Tang.
CEO Peter Greenleaf remains on the board after his conditional resignation was rejected, according to Thursday’s announcement. Aurinia said the board “determined that there are exceptional circumstances that warrant the rejection of Mr. Greenleaf’s conditional resignation” and his inclusion “is in the best interests of the company.”
Aurinia’s stock $AUPH was up about 8% on Friday morning.
Tang’s appointment fueled buyout speculation: His firm Tang Capital Management was behind five unsolicited offers in 2023, more than any other investor. A spokesperson for Aurinia did not immediately respond to a request for comment when asked if the company had already fielded a buyout offer from Concentra, Tang Capital Management’s shell company.
Three board members have stepped aside: Daniel Billen, Hector MacKay-Dunn and Brinda Balakrishnan. All three received less than majority support at the company’s annual shareholder meeting earlier this year and a proxy advisory firm recommended that all three be removed, according to a shareholder letter in June from another activist investor, Lucien Selce.
Selce and ILJIN SNT, another shareholder, say they are frustrated with how management is steering the company and both have called on Greenleaf to resign. ILJIN sent its own recommendations in May. In another Selce letter from August, he described a conversation with an anonymous investment bank that reinforced Aurinia’s value, should Greenleaf be replaced.
“The investment bank is also willing and able to assist with implementing a new strategy, and has expressed its confidence that, without Mr. Greenleaf, Aurinia remains an attractive target for a buyer,” Selce wrote.
Shareholder concerns date back to 2023. They continued after the company said in February that it failed to find a buyer and that it would focus resources on its lupus drug Lupkynis going forward. Part of that announcement included ending work on preclinical assets AUR200 and AUR300, though Greenleaf told investors months later on the company’s second-quarter call that AUR200’s development had continued.
“This inconsistency not only undermines the credibility of the company’s leadership, but also raises serious concerns about transparency with the market,” Selce wrote in August.
Aurinia reported earlier this month that the first person had been dosed with AUR200 in a Phase 1 trial.