Penwest investors seek faster resolution of lawsuit against company

By Lisa Kerner

Charlotte, N.C., May 26 - Penwest Pharmaceuticals Co. shareholders Tang Capital Partners, LP and Perceptive Life Sciences Master Fund Ltd. said they plan to seek an expedited trial in their ongoing lawsuit against the company.

Tang Capital and Perceptive filed a lawsuit after Penwest disclosed it had reduced the number of directors to be elected at its 2009 annual meeting. The investors said the move effectively reduces shareholder representation.

The court, ruling on the preliminary injunction motion, indicated that an expedited trial would be appropriate in order to promptly resolve the matter.

According to Tang Capital and Perceptive, Penwest made the disclosure it had reduced the size of its board after confirming that the size of the board was nine directors and after the deadline had passed for submitting notification of matters to be brought at the annual meeting.

In addition, the investors said Penwest's disclosure came after Tang Capital and Perceptive submitted their intention to nominate three directors and submitted a bylaw proposal requiring a 75% board approval for certain significant board decisions.

Penwest will hold its annual meeting on June 10.

Kevin Tang of Tang Capital said the lawsuit could have been avoided if Penwest's board had "simply been honest and transparent with respect to its intentions, or at a minimum allowed us an opportunity to modify our proposals in light of its late-announced actions."

"We continue to request that Penwest's board bring the litigation to a swift end by allowing us an opportunity to bring our revised bylaw amendment, providing for an 81% super majority for certain significant board decisions, to a vote of the shareholders at the annual meeting," Tang said.

Penwest said previously in a letter to its shareholders that Tang Capital and Perceptive have rejected compromises to avoid a costly proxy contest and "are instead attempting to gain veto power and effective negative control over important board decisions that could stalemate Penwest's operations in order to carry out their own agenda."

Tang Capital and Perceptive want to immediately wind down the Danbury, Conn., pharmaceutical company's operations, Penwest told shareholders.

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