Jury Finds Biotech Firm, Ex-CEO at Fault

Lidak Pharmaceuticals and its ousted founder were guilty of misconduct, a Superior Court jury has determined. The San Diego biotech company must pay former chief executive David Katz $6.7 million for mistreating him. At the same time, Katz must pay Lidak $9 million for mismanagement. The jury’s divided decision this week capped a five-week trial and five days of deliberation. Jurors said Lidak, now known as Avanir Pharmaceuticals, was awarded $2.3 million more in damages because Katz had failed to live up to his CEO responsibilities. Lidak’s board fired Katz in March 1998 after a dispute that involved a proposed $130 million loan from a little-known Beverly Hills financier, HealthMed. Katz initially sued the company to get his job back, but revised the claim earlier this year to say Lidak libeled him by saying he was fired “for cause.” Lidak filed countersuit, alleging Katz had abused employees, misled board members about important issues and participated in a plot to undermine the company’s control of its drug Lidakol, a treatment for cold sores.