“Pharma Drama: bluebird bio, Inc. Directors Accused of “Grossly Excessive” Compensation While Separate Errant Gene Therapeutics Lawsuit Heads for Trial
Pharma Drama: bluebird bio, Inc. Directors Accused of “Grossly Excessive” Compensation While separate Errant Gene Therapeutics Lawsuit Heads for Trial
In new twists on a convoluted tale of medicine and money, a shareholder lawsuit against bluebird bio, Inc.’s (formerly Genetix) directors is accusing them of overpaying themselves, as other litigation moves forward. bluebird bio has been featured on our site in the past; a good overview of the ongoing battle of Errant Gene Therapeutics (EGT) versus bluebird bio, capital firm Third Rock Ventures, and the Memorial Sloan Kettering center (MSK) can be found here. Other news about bluebird partnering with Novo- Nordisk is here. The bluebird-MSK litigation accuses both of essentially slow walking and trying to “kill” EGT’s allegedly superior gene vector product.
In the new case, filed in Delaware state court on March 20, 2020, a shareholder alleges that bluebird’s eight directors, including Chairman Daniel Lynch, have been grossly overpaid for several years. According to the suit, the 2018 average compensation for board members was $748,652, and the average for other mid-cap firms with similar value was about one-third of this amount. The suit includes causes of action for breach of fiduciary duty, unjust enrichment, and wasting corporate assets. The suit seeks an order that the directors must “disgorge” or return their excess pay, and it also seeks corporate-governance reform aligning compensation with real-life metrics. This case will test the accuracy of bluebird’s website claim that, “All our interactions are guided by our belief of putting patients first….”
The common theme involves allegations of general ethical failure. The tangled nature of the parties and entities makes one wonder if our corporate medicine world is not awash in conflicts of interest. Discussing EGT’s lawsuit, the New York Times in 2015 said that “Errant Gene is demanding to regain control of the [gene vector] project. It accuses Sloan Kettering of sitting on the therapy because the cancer center’s president, Dr. Craig B. Thompson, has ties to Third Rock Ventures, the venture capital firm that bankrolled Bluebird. Third Rock also financed Agios Pharmaceuticals, a company of which Dr. Thompson is a co-founder.”
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