Wednesday, July 9, 2008

Another biotech firm’s CEO to step down

Rudnic departs as head of MiddleBrook as part of a $100M cash infusion

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For the second time in two weeks, a giant of Maryland’s biotech industry recently announced plans to step down.

Late last month, it was CEO David M. Mott leaving MedImmune. Last week it was Edward M. Rudnic who is resigning as CEO from MiddleBrook Pharmaceuticals, the Germantown company he founded in 1999.

Rudnic’s departure comes as part of last week’s shake-up involving a $100 million equity infusion from a Chicago investment firm.

In addition to building the company, Rudnic, who could not be reached for comment, has long been active in state biotech circles; he was recently re-elected chairman of the Tech Council of Maryland. He will remain at the head of MiddleBrook until the investment deal closes, which is expected by September, said Robert Bannon, the company’s vice president of investor relations.

And Rudnic will continue to work closely with MiddleBrook after that, under a long-term consulting contract, Bannon said. That contract is for ‘‘a period of years,” he said.

‘‘Everything the company has achieved to date is attributed to Dr. Rudnic,” Bannon said.

Board chairman R. Gordon Douglas thanked Rudnic in a statement for his ‘‘leadership, vision and proven entrepreneurial achievements.”

MiddleBrook has been openly exploring options that include a sale or merger for the past year. Those efforts were stepped up in February when the company hired Morgan Stanley & Co. as its strategic adviser — shortly after obtaining approval from the U.S. Food and Drug Administration for its once-daily amoxicillin treatment for strep throat called Moxatag.

The agreement with Equity Group Investments, founded by Chicago billionaire financier Sam Zell, provides MiddleBrook with the financial resources and operational management expertise to make Moxatag a commercial success, Douglas said.

The agreement calls for Rudnic to be replaced by John Thievon, former executive vice president of sales and corporate accounts for Adams Respiratory Therapeutics.

In addition, CFO Robert C. Low will leave MiddleBrook to make way for David Becker, former CFO at Adams, who will become executive vice president of finance and CFO. Low, MiddleBrook’s vice president of finance since 2005, also has a long-term consulting contract with the company.

It’s a common practice and makes sense for an investor to come in and bring in its own top managers to take a life science company to the next stage, said Henry Bernstein, senior vice president for Scheer Partners, a real estate company in Rockville that focuses on bioscience industry. Bernstein is also former deputy director of the Montgomery County Department of Economic Development.

‘‘The fact that top management is leaving to be replaced by other management is kind of par for the course,” Bernstein said. ‘‘I think it’s a positive scenario, and it’s positive for Ed. He will probably hang around the company for a while, then get into a new venture. ... I don’t see a downside. Hopefully he will stay in the community, because he’s been of tremendous value for the county and state.”

‘A pillar in this community’

Rudnic was re-elected in May for another year as board chairman of the Tech Council, said Julie Coons, CEO of the industry group. He is in his second year in that position, as typically chairmen serve for three one-year terms, she said.

‘‘I expect him to continue to be very involved in our organization,” Coons said. ‘‘Ed has been, and continues to be, a pillar in this community.”

Rudnic was the visionary behind Mid-Atlantic Bio, she said. The annual regional bioscience conference began in 2005 and is slated for Dulles, Va., in October. Rudnic is also on the board of the entity managing the BioPark at the University of Maryland, Baltimore, and is an adjunct professor there.

Before founding Advancis Pharmaceutical Corp. — the company changed its name to MiddleBrook in 2007 after a legal trademark battle with Sanofi Aventis — Rudnic directed U.S. research and development activities for Shire Pharmaceuticals. He has also worked for Pharmavene, Schering-Plough Corp. and E.R. Squibb & Sons. The Potomac resident grew up on Long Island in New York and earned a bachelor’s in pharmacy, a master’s in pharmaceutics and a doctorate in pharmaceutical sciences from the University of Rhode Island.

MiddleBrook, which went public in 2003, has seen its revenue increase in the past year, largely due to sales of Keflex, an antibiotic. Last year, sales more than doubled over 2006 to $10.5 million. But, as is common for the vast majority of biotechs whose products must undergo lengthy clinical trials before they are marketed, net losses at MiddleBrook have mounted. Those include $13.8 million in the first quarter this year and $42.2 million for all of 2007.

Keflex is not a patented product, while Moxatag is, which has executives excited about its future. Antibiotics usually are taken several times a day, not once, which is Moxatag’s advantage. ‘‘It has a lot of commercial potential,” Bannon said.

MiddleBrook has shed employees in the past year or so, down from 76 in February 2007 to 33 this February, according to its last two annual reports.

Staff Writer Steve Monroe contributed to this report, which originally appeared in The Business Gazette.