Blast at Board Costs Lidak Exec His Job

Lidak Pharmaceuticals said on Thursday that it has named Gerald Yakatan to replace David Katz as company president and chief executive, a day after Katz blamed Lidak’s board for the loss of an $80-million to $130-million loan proposal.

Lidak, a La Jolla-based drug company, received notice Tuesday that HealthMed Inc. was ending all discussions about the loan, which was earmarked to help sell Lidak’s anti-herpes drug Lidakol. Katz then lashed out at the board, questioning members’ “lack of significant personal investment” in Lidak and blaming the board’s “delaying tactics” for HealthMed’s withdrawal.

Lidak Board Chairman William Jenkins, who called Katz’s comments “totally inappropriate,” said in a statement that a switch had to be made.

“We recognize and appreciate Dr. Katz’s contributions to the company. However, a change in executive management is necessary at this time,” he said.

Yakatan has been Lidak’s vice president of drug development since 1995.

Lidak shares fell 6 cents to close at $1.75 in Nasdaq trading.

Katz said his removal came as no surprise.

“A lot of shareholders were let down and I had to break my silence. I knew that what I did, I did at risk,” he said.

Katz said the financing was a unique opportunity for Lidak--a “rolling, continuous credit card” that would not dilute shareholder value and would allow Lidak to profit directly through Lidakol rather than indirectly through royalties.

“We had the opportunity to do something to capture more than a royalty-based revenue stream,” he said.

Katz said he was under a gag order during the negotiations, and bit his tongue on Feb. 23 when HealthMed asked all Lidak board members except Katz to resign. HealthMed said at the time that the board was “apathetic. “