Two of Cleveland BioLabs’ directors, including the Buffalo drug development company’s chairman, have resigned after the money-losing firm decided to stop paying for liability insurance to cover its officers and board members.
Richard S. McGowan, a lawyer who was named Cleveland BioLabs’ chairman last year, and James Antal, a former Experian chief financial officer who had been a director since 2006, resigned from the board July 8. Both are members of the company’s audit committee, which now is down to one independent board member.
McGowan and Antal did not say why they were resigning in their resignation letters. But Cleveland BioLabs, in a filing with the Securities and Exchange Commission, said that the directors resigned because they disagreed with the company’s decision not to renew the liability insurance that covers its directors and officers for their actions as members of the board – a standard coverage provided by nearly all publicly traded companies.
Cleveland BioLabs said it decided not to renew the policy as a cost-saving measure. The drug development company has struggled financially because it has taken years longer than expected to complete studies to bring its anti-radiation sickness drug to market. The company lost $677,000 during the first quarter of this year and $12.6 million last year.
A Russian billionaire, David Davidovich, acquired a 61 percent stake in the company for $25 million last July and won the right to appoint a majority of the firm’s directors.