iCAD reshuffles board after member’s rebuke

New board chair named, two new members appointed after critical letter

Nashua-based iCAD has agreed to name a new board chair and replace half the members on it board after a member resigned and threatened to mount a challenge at the annual meeting.

Andy Sassine, who owns 7.5 percent of the company’s shares, resigned from the board on Sept. 26 because of what he said in a letter to the board was iCAD’s “poor performance, lack of shareholder confidence and poor governance practices.” But he later withdrew his resignation and was reappointed on Oct. 2 after the board agreed – “as soon as reasonably practical” and pending to a review of the Nominating and Governance Committee – to many of his terms, according a filing that same day with the U.S. Securities and Exchange Commission.

One newly appointed member, Michael Klein, CEO of Inflection Point Consulting, a medical technology company, will become board chair in place of Dr. Lawrence Howard, who has chaired to board since 2007. Howard will remain on the board. 

In his letter Sassine said believed that the company would be better off with a new chairman “without such historical ties” who would be able better able to examine the company’s failures, leading to a more “proactive and effective board.”

The other two new members are Rakesh Patel, medical director of Radiation Oncology at Good Samaritan Hospital since July 2013 and Susan Wood, former CEO of Vida Diagnostics Inc. They, along with Klein, will replace Dr. Elliot Sussman, Somu Subramaniam, Anthony Ecock and Dr. Robert Goodman   

The company also agreed to make Sassine – who complained of not being appointed to any committee – chair of the compensation committee, and Patel was named chair of the nominating and governance committee.

iCAD CEO Ken Ferry said that all board members serve a one -year term, and “the notice from Mr. Sassine initiated a healthy dialogue among members and introduced renewed perspectives that will ultimately strengthen our ability to drive future growth of the company.”

Sassine, who lives in New Mexico, was a portfolio manager for a dozen years at Fidelity before he became involved in a number of biotech companies. He is also the CFO of Arcturus Therapeutics, a San Diego, Calif., firm that works with RNA therapies.

When Sassine joined the iCAD board nearly three years ago, he said he was optimistic of the company’s potential to “enhance shareholder value” and deeply believed it could make advancements in early cancer detection and cancer therapy. But he became “increasingly frustrated,” he wrote. “I can no longer stand idly by while the board’s inaction and misdirection directly harms the interests of iCAD’s shareholders.”

His concerns included poor stock performances, questionable government practices and executive compensation practices that have drawn criticism from Institutional Shareholder Services Inc., he wrote. He alleged that compensation payments have been made despite the company’s underperformance, and the company’s failure to achieve operational and revenue targets. He noted that seven board members have served for eight years or longer.

iCAD has struggled financially over the last three years, posting net losses of $32.4 million in 2015, $10 million in 2016, $14.3 million in 2017 and $4.3 million in the first half of this year.

In January, the company laid off 21 workers, about a fifth of its workforce, after it curtailed skin cancer treatments to focus on operations with higher margins, including developing technology that could cut the costs of 3-D mammography.

Three years ago, it stock sold for about $10 a share. At the close of trading on Tuesday, the price was $3.24.

Shareholders also have expressed discontent about Ferry’s pay as CEO. Two years ago, in a nonbinding “say on pay” vote, 58.7 percent of shareholders voted against the company’s compensation policies, a rare rebuke. Nationally, the average percentage of no votes is in the low single digits.