The termination of the royalty agreement between Alfacell and Ms Shogen could reduce payments from the company to Ms Shogen by an estimated $20 million over the next 10 years, if the company’s lead compound, Onconase, is granted marketing approval by the FDA.
Under the terms of the retirement agreement between the company and Ms Shogen, Ms Shogen will continue to receive her current salary for a period of two years after she steps down as CEO. In exchange for the termination of the royalty agreement, Ms Shogen will receive a cash bonus, an additional cash bonus upon receiving marketing approval by the FDA of Onconase for the treatment of malignant mesothelioma, a significant stock option grant that vests upon such FDA approval of Onconase, cash payments for the first two years following approval of Onconase, and cash payments from Alfacell in the event aggregate annual net sales of Onconase exceed $100 million.
In addition to the retirement of Ms Shogen, the company announced that Lawrence Kenyon has been named president. Mr Kenyon joined Alfacell in January 2007 as executive vice president, CFO and corporate secretary. He was promoted to COO and elected to the board of directors in November 2007. The change in responsibilities is said to be consistent with the efforts of the board of directors to develop a succession plan that allows for a smooth leadership transition upon the potential marketing approval of Onconase.