Dalton Gooding has agreed to stand down as chairman of biotech company Avita Medical but shareholders today supported the re-election of Professor Fiona Wood as a director.
Mr Gooding agreed to step down after major shareholders showed their displeasure with a 75 per cent ‘no’ vote against the company’s remuneration report.
Investment groups Australian Ethical and BioScience Managers (which has two representatives on the board) both voted against the remuneration report, after criticising management of the ‘spray-on skin’ company.
Mr Gooding intends to stay on the board while a replacement is found.
However that did not satisfy BioScience Managers investment director Graeme Wald, who said that, in light of the big protect vote, Mr Gooding and chief executive William Dolphin should stand down immediately.
Professor Wood, who was unable to attend the meeting because of work commitments in China, was comfortably re-elected as a director, while Michael Perry was elected as a board member.
In a statement issued before the meeting, BioScience investment director Bronwyn Dilley said: "Shareholders are increasingly frustrated that a great technology is being poorly served by the management of the company.
"We've raised our concerns with the company regarding its performance and strategic direction, yet feel there is a complete lack of urgency to improve the company’s situation.
"We invested in the company based on a sound technology with a product approved for sale in international markets. However, progress made by the company has been very slow and the core leadership of the chairman and CEO needs change as the first step to reinvigorate the company."
Mr Gooding told the meeting there had been many positive developments for the company, which was positioning ReCell for use in cosmetic and clinical regenerative medicine.
“Through this we expect to see a gradual increase in sales as market acceptance and awareness increases,” he said.
Mr Gooding said the move into cosmetic medicine and ulcers had been a deliberate strategy over the past two years to reduce risk and open new opportunities.
Specific achievements included ISO quality recertification, which he said essentially provides for the marketing of ReCell in Europe, and the granting of a Japanese patent for the ReCell spray-on skin technology.
Commenting on the "pivotal" trials by the US Food and Drug Administration for the use of ReCell for burns, he said there had been “much slower than anticipated enrolment into the study, which is primarily due to the complex protocol and strict inclusion criteria set out by the FDA”.
“I share the frustration of our shareholders at the amount of time this is taking, however the length of the FDA registration process is not something we can control.”
Bioscience criticised the company's focus on the burns trial in the US.
“With recruitment slowing and the trial’s co-funder AFIRM (the Armed Forces Institute of Regenerative Medicine) expressing concern regarding FDA approval in its annual report, it may be that this is not the best use of shareholder funds,” BioScience said.
"The increasing cash burn in the US, where the core product ReCell is not yet approved, and the poor conversion of sales and marketing expenses into increased revenues indicates that a change of plan is immediately needed."
Mr Gooding told today's meeting that AFIRM continued to support ReCell, having awarded Avita an additional $880,000 grant through the US Department of Defense in support of the FDA trial.
Avita was established in its current form in 2008, following a merger of Perth companies Clinical Cell Culture and Visiomed Group.
The merger was implemented after C3 encountered delays in gaining regulatory approvals, particularly for its ReCell product in the United States.
C3 listed on the ASX in 2002 after its core technology gained much public attention when Professor Wood and others used it to treat victims of the Bali bombings.
Its latest annual report, for the year to June 2013, showed that Avita earned $2.8 million from the sale of goods and had a loss of $7.9 million.
Dr Dolphin had total income of $552,000, including a cash bonus of $103,000.
