Examination of Witnesses (Questions 260
- 279)
WEDNESDAY 15 JULY 1998
MR BOB
YERBURY, MR
NEIL WOODFORD
AND MRS
MARGARET RODDAN
Chairman
260. I would like to just move us on a little
bit, but my question I think is very pertinent to the situation
that Dr Williams has taken us to. Why did you, Mr Yerbury—or
maybe it was Mr Woodford—choose to approach Dr Millar with
your concerns about British Biotech rather than the Board of the
company? Mrs Roddan?
(Mrs Roddan) Both Neil Woodford and I had spoken to
Jane Henderson and run through her meeting with the company and
her conversation with Dr Millar. Dr Millar was one of the people
who consistently over the period that we had invested in the company
we had met. He was somebody that we felt was best placed to answer
our questions about how the clinical trials were going and what
was going on within the company. Our concern was obviously that
the cash burn rate in the company spending was too high, given
that we were not expecting products coming to market for some
period of time and we wanted to make sure that the future of the
drugs was guaranteed. He had raised concerns with Ms Henderson.
He obviously was not willing to talk to her about it, did not
feel that she was the right person to talk to. Mr Woodford and
I discussed the fact that there were obviously things going on
that we did not really understand. We did not really understand
why the company was spending as much money as they were and we
were concerned to find out more information.
261. I can understand that you might wish to
approach Dr Millar, having approached the directors first and
not got an answer that you thought was satisfactory, but it is
difficult to see why you would go to Dr Millar first. Is that
not a bit sneaky; is it not like going behind the back of a Board
before you have given the Board a chance to be frank and honest
with you?
(Mrs Roddan) The people from Goldman Sachs had already
quizzed the people from the Board that were available and Dr Millar
made it known—
262. When did you quiz the Board?
(Mrs Roddan) Goldman Sachs had spoken to the Board.
263. When?
(Mrs Roddan) When she had had the meeting on 12 January.
264. Oh, Goldman Sachs had, yes?
(Mrs Roddan) Goldman Sachs had. In this position really
because as we explain in the process that we go through, we rely
on analysts to give us information about what is going on in companies
as well as meeting companies ourselves; we had had a meeting previously
with them in October.
Dr Jones
265. But Goldman Sachs were not the analysts
for Biotech?
(Mrs Roddan) No, we had talked to other analysts as
well. Over that period we had also talked to other analysts who
were also concerned about what was going on in the company.
Chairman
266. But did you ever try to speak to the directors
of the company? Did you go to Dr Millar first?
(Mrs Roddan) We went to Dr Millar first because he
was the person we had had most contact with, because people we
had previously had strong contacts with at the company were Dr
Lewis, who no longer worked there or James Noble who no longer
worked there and they had been the people consistently over a
period of time that we had always met and had always been the
spokespeople for the company. When we had had meetings with the
company it had normally been Dr Lewis and Dr Millar who had represented
the company. Therefore it seemed to us appropriate that the person
that we had consistently met over a very long period of time,
who had consistently been the chosen spokesperson for the company,
was the person that we should go to directly and ask their opinion.
Dr Turner
267. That worried you?
(Mr Woodford) It is unusual for someone not to be
made available in the way that Dr Millar had not been made available
to analysts when he previously had been available. We were not
the only people who were concerned by this.
Chairman
268. Now, Mr Yerbury, did you request solicitors
to draw up papers for an Emergency General Meeting of the shareholders
as Dr Millar said in his documentary evidence to us?
(Mr Yerbury) We certainly asked for their advice on
the procedures. I cannot remember whether we went as far as drawing
up papers.
(Mr Woodford) We did.
(Mr Yerbury) Okay, we did. I know we asked their advice
on the procedure.
269. And they did draw up papers?
(Mr Yerbury) Yes, they did draw up papers.
270. Do you agree that as a result of the meeting
with Dr Millar—and he again quoted this in his evidence
to us—that your representatives, and I am quoting Dr Millar—"agreed
that the Board of British Biotech should be removed and the business
plan substantially scaled down"? Is there truth in that?
(Mr Yerbury) We felt there had to be changes. Our
first focus was on the cash burn. That was what we were most worried
about at the time, so we needed an indication of a change of strategy—
271. No-one is criticising you.
(Mr Yerbury)—and if that involved a change of
personnel—
272. By agreeing that you did draw up papers
with the solicitors, that you did talk about different business
plans shows the intensity of your concern. That is all we were
trying to find out?
(Mr Yerbury) Yes, we were very concerned.
273. I turn now to Dr Turner, so we can move
on.
(Mrs Roddan) May I just add one thing?
274. Be very brief please.
(Mrs Roddan) That was not the conclusion of the meeting
that we had with Dr Millar, though. When we had the meeting with
Dr Millar we did not come away from that with the conclusion that
that was—we came to the conclusion that there were concerns,
but we did not come to a conclusion about what the appropriate
action to those concerns was.
275. At that time?
(Mrs Roddan) No.
Dr Jones
276. May I just clarify that you approached
Dr Millar, not the other way round.
(Mrs Roddan) Yes, I made the approach to Dr Millar.
Dr Turner
277. How did you seek to verify what Dr Millar
told you?
(Mr Woodford) We sought to verify it in a number of
ways. First of all I contacted another analyst for whom I had
a high regard at Morgan Stanley and asked him about one or two
matters which were in the public domain, but I knew that he had
just returned from the United States where he had been doing some
research on the progress of the clinical trials, particularly
Marimastat. The second thing that I did was, obviously, speak
to Andrew Millar extensively and study the documentary evidence
that he presented to us.
278. Okay, so between the first meetings you
had with Dr Millar and the subsequent meeting with Kleinwort Benson
what action did you take?
(Mr Woodford) First of all we had meetings internally
within Perpetual to decide what was the best way forward. Our
first thought was that (a) the concerns were very serious and
that we should speak to the other major shareholder, who was Mercury
Asset Management.
279. Did you inform British Biotech of your
worries?
(Mr Woodford) At that stage, no.
| 
