War between Helix and shareholder continues

However, Helix could have gained the upper hand as it revealed today that International Penta Financial Services, one of its main shareholders, has not fully disclosed the nature of its Helix share position.

Helix has learned that all the shares owned by International Penta in Helix, "are in the process of being sold by an international bank under a judicial order in Switzerland," while International Penta claims it holds 2,035,698 Helix shares.

"Blocks of International Penta's holdings have been sold into the marketplace over approximately the past two years, in order to make up for a debt International Penta owes,"​ said Helix in a statement.

Penta responded by saying that Helix's "misleading press release"​ was "a desperate attempt to divert attention from the issues affecting all shareholders of Helix".​

This is the latest development in the fight between Helix management and International Penta Financial Services, which has been going on for weeks.

Helix's drama started last December when Penta urged shareholders to vote against management's private placement proposals due to be approved at the shareholders annual meeting scheduled for 23 January because it claims the proposal is not in the best interest of the shareholders.

International Penta along with its chairman Herald Janssen, an important shareholder of Helix, warned other shareholders that they "will suffer as a result of Helix's ill timed, dilutive private placement."​

In addition, Penta said it intended to vote against the election of the directors proposed by management as it said they lack independence.

On 5 January, Penta officially filed a dissident proxy circular that urged Helix shareholders to vote against the resolution authorising a private placement which could result, it said, in dilution of up to 76 per cent of the current outstanding common shares of Helix and to vote for the six nominees proposed by Penta to form the board of directors of Helix.

Since then the two parties have been playing a continuous game of "press release ping-pong" using the media as a go-between.

On 10 January, Helix responded to Penta's announcement saying that the dissident proxy circular issued by Herald Janssen on behalf of Penta was nothing but "self serving"​, not in the best interest of Helix shareholders.

Helix maintains that the board continues to act in the best interest of all shareholders, and is committed to undertaking activities that are intended to result in the quick commercialisation of its new drug product candidates, L-DOS47 and Topical Interferon Alpha-2b.

But Penta claimed that the private placement proposed by Helix could result in up to 107 per cent dilution. Penta said it believes that management of Helix is attempting to dilute the voting power of shareholders who disagree with management through "this massive share issuance at historically low prices."​

One of Penta's main argument is that the timing is wrong and that there is no convincing reason for the company, with 18 months of cash available, to conduct such a massive private placement at such low prices - 10 per cent discount to the market price and as low as $1.80 per share - and at such a high commission rate.

"In fiscal 2000, we invested $10m in Helix securities at $3.33 a share and have seen our investment drop to its current price,"​ said Herald Janssen, Chairman of International Penta, in a statement last week.

"This private placement has forced us to act to protect our position and that of all the other shareholders."​

Helix's current saga is the second mediatised biotech proxy fight in the last two years.

Last year, Baker Brothers, a major shareholder of pharma company AnorMED, initiated a proxy to replace the management slate of directors. The management slate was defeated by shareholders of AnorMED by 75 per cent, according to media reports.

Helix shareholders will have a final say in the current battle between Helix and Penta next Tuesday when they vote at the annual shareholders meeting.