Optics suggest: (1) CEO couldn't keep his p-nis in his pants; (2) CEO gets shaken down; (3) shareholders pay for CEO's personal life choices. This is how they spend the money they raised from the last secondary (from which the stock price still hasn't recovered?)
Long-term, this doesn't change the investment thesis. Short-term, on a low-volume stock like this, shortsellers will give the price a pounding, and innocent investors will likely be receiving margin calls.
I'm not short (shorting TNK, long OGXI), but won't be adding on this dip (crash?) because the jury is still out about the CEO's judgment over this office romance and whether management can be trusted in the future not to waste corporate assets on their personal lives.
The filing states that the affair is a "developing personal relationship." If it's ongoing and on good terms, why does the Board need to pay Burris not to sue? Smells like a shakedown to me.
"If Ms. Burris agrees to release all claims against the Company, the Company has agreed to engage Ms. Burris as a consultant for a period of one year, beginning on the date she agrees to release all claims ... . Following the end of the consultancy, if Ms. Burris agrees to release all claims against the Company, the Company will pay Ms. Burris a lump sum payment of approximately $410,000, which is consistent with the severance payment in her prior employment contract ..."
Why couldn't Cormack be like other CEOs and just bang his secretary? Biotech investing is risky enough.
BTW, anyone seen her picture (Google it)? What a waste of money!
All valid points but I don't see the financial hit as being that significant. The previous CFO, Steve Anderson, also resigned abruptly under mysterious circumstances (though without the giant buyout), and the company left the position vacant for a year or so until they settled on the talented Ms. Burris. I suspect they'll do the same now, although they no longer have Cameron Lawrence filling in in a more junior position.
Cormack's judgment takes a bigger hit, but it's not unusual for CEOs to display lapses in that area. I still think this will blow over fairly quickly.