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Trovagene Terminates CEO Schuh and CFO Zaniboni for Breach of Duty

NEW YORK (GenomeWeb) – Trovagene announced on Monday night that it has fired its CEO Antonius Schuh and CFO Stephen Zaniboni, alleging that the two executives failed to present the company with a lucrative opportunity for a new therapeutic, and instead took the opportunity for their own personal benefit.

Trovagene has also filed a complaint against Schuh and Zaniboni in the Superior Court of the State of California for the County of San Diego for breach of fiduciary duty, among other things. The complaint asks that Schuh and Zaniboni be required to turn over their interests in these new therapeutics to Trovagene. 

Trovagene Chairman Thomas Adams is serving as interim CEO until the company can find a permanent replacement. Adams has served as chairman since April 2009. Schuh has served as CEO since October 2011, and Zaniboni has served as CFO since January 2012.

In a follow-up conference call with analysts on Tuesday morning, Adams said the decision to terminate Schuh and Zaniboni bears no impact on the company's fundamentals or strategy and was done in the best interests of its shareholders.

"Trovagene's prospects remain intact, its strategy and vision continue as planned, and we have a strong bench of leaders at the company including [Chief Commercial Officer] Matt Posard and [Chief Scientific Officer] Mark Erlander," Adams said. "We don't see any business disruption — the company's well financed, we have technology that works, we have papers coming out, and we have a strong commercial team."

When asked how long the board knew about Schuh and Zaniboni's side activities, Adams said the issue came to the board's attention in the past few weeks. Though he said he couldn't go into the details of this unnamed opportunity for legal reasons, Adams said it would have been important to the company, and the board thus felt it was necessary to act. He did say that this issue is not a matter of something being taken out of Trovagene, as the company has not yet developed therapeutics. However, the firm thinks of itself as a precision medicine company, and though it has started with the development of diagnostics, it had always planned to develop therapeutics as well.

As for replacements for Schuh and Zaniboni, Adams said the company has already started looking for new leaders. He indicated that Trovagene will engage a search firm to look for candidates outside the company, but he also suggested that there are already several strong executives within the firm that could fill the positions. Specifically, he said, "Matt Posard is one of the top commercial people in our business." Adams expects the replacement process to go quickly. Posard has been with the company for one year. Before that, he held multiple roles at Illumina, including vice president of marketing, vice president of global sales, senior vice president and general manager of Illumina's new and emerging market opportunities business, and general manager of its translational and consumer genomics business.

Adams also noted that Trovagene is preparing to defend itself against any possible wrongful termination lawsuits Schuh and Zaniboni may file, and has hired lawyers specializing in labor law, corporate law, and litigation.

Trovagene's shares were down almost 9 percent at $4.66 in Tuesday morning trading on the Nasdaq.