Four months after calling for the resignation of four board members from Assertio Holdings, New York investment advisory firm Buxton Helmsley Group has flipped its long equity position into a short interest in Assertio’s publicly traded securities.
BHG revealed its move in an open letter to Assertio stockholders, citing the board’s failure to address “fraud and misconduct” claims associated with a drug that it acquired in its $248 million buyout of Spectrum Pharmaceuticals in April 2023. The claims are backed up—according to Alexander Parker, BHG’s senior managing director—by “multiple” former executives of Spectrum who have become whistleblowers and “have continued sounding the alarm over severe and ongoing safety matters that are continuing to put cancer patients at risk.”
As a result of the letter—which was published Friday—Assertio’s share price tumbled from $1.02 per share to $0.80. As the company responded to the allegations with its own letter to shareholders Monday, the price rebounded to $0.92.
On a conference call Monday, after the close of the market, Assertio CEO Brendan O’Grady characterized BHG’s letter as “less than cogent” and a “rambling manifesto.”
“Normally, I would not validate such conduct by speaking about it, but because of the numerous falsehoods and baseless allegations that had such an impact on our share price, I want to use this opportunity to address this head-on,” he said.
O’Grady said Assertio has investigated the allegations and found them “without merit.” He also said that Parker’s request for a seat on the company’s board would “add zero—and I stress zero—value.”
The allegations surround Rolvedon, a drug that was approved by the FDA in September 2022 but has struggled to gain traction in the market. Monday afternoon, Assertio reported third-quarter sales of Rolvedon at $15 million, which was down from sales of $15.1 million in the previous period. The company said that volume growth was offset by lower net pricing.
During the call, O’Grady said Assertio was aware of the whistleblower claims before acquiring Spectrum and that an investigation determined that the FDA knew of the claims and had all the information it needed to assess Rolvedon upon its approval.
Rolvedon was approved to reduce infections that occur with neutropenia in cancer patients receiving chemotherapy. But later in 2022, when a second Spectrum candidate, lung cancer medication pozenveo, was rejected by the FDA, Spectrum reduced its headcount from 164 at the start of 2022 to 40 at the end of the year. As a result, the struggling company became a takeover target.
Three months after Assertio made the deal to buy out Spectrum, it wrote down the value of the acquired company by 75%. In February of this year, shareholders filed a class-action complaint in New York, alleging securities fraud, with one of the claims being that Rolvedon was not as valuable as Assertio portrayed to investors.
In August in Delaware, former Spectrum shareholders sued the company and Assertio, asserting double-derivative claims that the companies misled investors.
O’Grady also said on Monday that Assertio’s impairment charges had “nothing to do with any purported Rolvedon safety claims,” and that the company followed “clearly established accounting principles.”
After the write-down, BHG called for the resignation of four board members, including chairman Peter Staple. As part of its quarterly report, Assertio revealed that Staple had stepped down from the board after 21 years as an independent director and has been replaced by Heather Mason, who served as the company’s interim CEO in the first five months of this year.
The company also announced that Jeffrey Vacirca had been replaced on the board by David Stark, who served alongside O’Grady when both were execs at Teva. The reshuffle of the board was effective on Nov. 7, Assertio said.
As for Rolvedon, O’Grady said that this year has been about “stabilizing the organization,” as it transitions to making the drug its lead product.
“As we move into 2025, we do think that further growth is not only possible, but that’s what we’re planning for as we expand beyond the clinic space into hospitals,” O’Grady said. “We're approaching this category and we’re approaching Rolvedon in the long-term play.”