Newport Drug Company Ousts Glasky as Chief

Outside directors of Newport Pharmaceuticals International have removed Dr. Alvin J. Glasky as chairman, president and chief executive, the company said Thursday, capping a controversial 18-year career at the drug concern.

Glasky, founder of the Newport Beach-based company and its largest shareholder, and his brother, Sanford, were also removed from the executive committee of the board. The committee assumed control of a newly created office of the president and chief executive.

The action, which occurred Tuesday but was not disclosed until Thursday, came less than two weeks after the U.S. Food and Drug Administration rejected Newport’s sole product, Isoprinosine, as a treatment for AIDS and rebuked the company for allegedly misrepresenting the drug’s test results.

Company officials, including interim Chief Executive John Flood, refused to say why Glasky had been ousted.

But one board member, who asked not to be identified, said the FDA’s pointed rebuff last month “was the last straw.”

Although Flood has been named the interim chairman and chief executive, a search for a successor to Glasky is under way, Flood said. The executive committee of the board is comprised of the company’s outside directors, who hold hold no management position.

Owns 5.99% of Stock

Glasky remains a director, though he is no longer involved in the day-to-day operations. Sanford Glasky remains a director and executive vice president. Alvin Glasky owns 5.99% of Newport’s common stock and Sanford Glasky owns an additional 1%. In all, the nine board members control 13.2% of Newport’s common stock.

Flood said Glasky has been offered, but has not yet accepted, a position as an outside consultant.

Founded by Glasky in 1968, Newport has unsuccessfully sought FDA approval of Isoprinosine for several ailments, including herpes simplex and a rare brain disease, subacute schlerosing panencephalitis (SSPE). The latest rejection of Isoprinosine marked the third time since 1974 that it has been turned down by the FDA.

The drug currently is offered for sale in nearly 100 foreign countries, where it is used to treat a variety of diseases, including herpes and influenza. Late last year, New Zealand approved it for use in treating acquired immune deficiency syndrome.

Following the FDA’s refusal in 1981 to approve Isoprinosine as a treatment for SSPE, the company unsuccessfully sued the federal agency. Relations between Newport and the FDA--never warm to begin with--have worsened since it sought approval for Isoprinosine as an a AIDS treatment, prompting the sudden shake-up, one company director said.

“The board was upset that things had deteriorated with the FDA and believed that it is time (for) a change; an attempt to try to find a new face with which to conduct business with the FDA,” the director said.

“This does not mean that the board felt that the FDA was right and Glasky was wrong. It’s an attempt not to fight City Hall,” he said, adding that the board had not been under any pressure from the FDA to fire Glasky.

The FDA said clinical tests of Isoprinosine involved groups of patients that were too small to provide meaningful data.

And then, in an unusual move, the agency publicly chastised Newport for calling a press conference in mid-February in which it said the company misrepresented the test results. “We did have objections to the press conference of Feb. 13, and we made those objections known,” FDA spokesman Brad Stone said. “The bulk of that conference had been devoted to making claims of effectiveness that could not be substantiated.”

Stock Climbs

However, Stone said that Newport is preparing new data on Isoprinosine for the FDA and “the file is still open.”

After the ouster was disclosed, Newport’s stock rose Thursday to $8.625 a share, up 25 cents in heavy over-the-counter market trading. More than 300,000 shares changed hands.

As previously reported, Newport posted a net loss of $377,000 for the fiscal nine months ended Jan. 31, compared to net earnings of $568,000 a year earlier. Revenue dipped to $7.6 million from $8 million last year.