Expresses Disappointment in the Board's Failure to
Articulate a Plan to Maximize Shareholder Value Amid Prolonged
Product Development Efforts Despite the Company's Strong Cash
Position
Criticizes the Company's Dismal Efforts to Communicate
with Shareholders Including its Failure to Hold Quarterly
Conference Calls
Questions the Board and Management's Alignment with
Shareholders Given Minimal Stock Ownership and Failure to Purchase
Shares in the Open Market
Calls on the Company to Actively Enlist Shareholder
Participation in a Process to Refresh a Majority of the Directors
on the Board with Highly Qualified Candidates to Fill Gaps in the
Existing Leadership's Skillset and Bring Fresh Perspectives and an
Ownership Mentality to the Boardroom
NEW
YORK, May 11, 2022 /PRNewswire/ -- Iroquois
Capital Management, LLC (together with its affiliates, "Iroquois"),
one of the largest shareholders of PharmaCyte Biotech, Inc. ("PMCB"
or the "Company") (NASDAQ:PMCB) with beneficial ownership of
approximately 5.1% of the outstanding common stock of the Company,
today announced that it has delivered a letter to the Company's
Board of Directors.
The full text of the letter follows:
May 11, 2022
PharmaCyte Biotech, Inc.
23046 Avenida de la Carlota, Suite
600
Laguna Hills, California 92653
Attn: Board of Directors
Dear Members of the Board of Directors:
Iroquois Capital Management, LLC ("Iroquois Capital," "us," or
"we") is one of the largest stockholders of PharmaCyte Biotech,
Inc. ("Pharmacyte" or the "Company"), with ownership of
approximately 5.1% of the Company's outstanding shares.
We invested in Pharmacyte because of our belief in the promise
of its proprietary cellulose-based live cell encapsulation
technology known as "Cell-in-a-Box®" and the potential for its use
as a platform upon which cellular therapies for several types of
cancer and diabetes can be based upon. However, much to our
disappointment, the Company has failed to create meaningful value
for stockholders or articulate any plan to do so despite its
envious assets and the patience its stockholders have extended to
the Board of Directors of the Company (the "Board") and management
to date in connection with the development of its product
portfolio.
Iroquois has substantial experience and a successful track
record of working constructively with the boards of directors and
management teams of our portfolio companies to enhance stockholder
value. Over the past six months, we have had multiple
constructive discussions with the Chairman of the Board, Chief
Executive Officer, President and General Counsel, Kenneth L. Waggoner. We are appreciative of our
engagement with Mr. Waggoner to date, but with the Company's stock
price trading almost 50% lower than the price at which our initial
investment was made in August 2021,
and at a significant discount to the cash on Pharmacyte's books, we
feel it is necessary at this time to raise our concerns directly to
the Board as the stewards of stockholder capital.1
To that end, we are writing to express our serious concerns
with the Board and management's (i) failure to articulate any plan
to maximize stockholder value in parallel with ongoing efforts in
the Company's product development pipeline despite the Company's
strong cash position, (ii) lack of capital markets experience and
failure to hold a single quarterly earnings or other conference
call with stockholders and (iii) minimal stock ownership, poor
incentive structures and failure to purchase a single share of the
Company's common stock in the open market.
We have made it clear to management that we are supportive of
the process set forth by the Company earlier this year to have the
Food and Drug Administration's clinical hold lifted so that the
Company may commence its planned Phase 2b clinical trial for the use of its
Cell-in-a-Box® platform in locally advanced, inoperable pancreatic
cancer ("LAPC"), for which an Investigational New Drug Application
was first submitted almost two years ago in September 2020. Regrettably, the timeline for the
lifting of this clinical hold continues to drift further into the
future and we understand from discussions with management that the
Company is now targeting sometime this fall for the hold to be
lifted and the LAPC trial to begin.
According to Mr. Waggoner, if and when the clinical hold is
lifted, the Phase 2b clinical trial
would take approximately six months to begin. Assuming no further
delay stemming from a resurgence in the COVID-19 pandemic, we
estimate that the trial will take at least two more years
thereafter to be completed and require a maximum outlay of
$30 to $35
million. With approximately $87
million in cash reported by the Company as of January 31, 2022, and a burn rate of
approximately $3.9 million over the
trailing 12 months,2 we see no plausible reason for
the Company to have not already taken concrete steps to enhance
stockholder value in the interim by announcing a share repurchase
program, issuing a dividend to stockholders, exploring additional
opportunities to expand drug licensing, or some combination of the
foregoing, all of which are suggestions we have already shared with
management in the past. We believe the Company's stockholders, its
true owners, deserve more than an expectation to sit idly by for
the upcoming two years.
Further, we find the Company's lack of consistent communication
with stockholders apart from issuing press releases to be extremely
problematic. Following its uplisting to the Nasdaq Stock Market, we
believe the holding of quarterly earnings conference calls is the
bare minimum insofar as the investing public's expectations of
proper investor relations practices are concerned. While we applaud
the Board's technical skillset, we believe this gap is yet another
example of a leadership team that appears to be lacking sufficient
capital markets experience. As mentioned earlier, we believe the
Company's story is a compelling one, and the Board and management
should be taking all appropriate opportunities to regularly extol
its promise to others and demonstrate its commitment and
accountability for the Company's performance and forward
progress.
Finally, as a large investor with millions invested as "skin in
the game," we are dismayed by the failure of the Board and
management to have ever purchased a single share of the Company in
the open market, despite the average tenure of 5.6 years for the
members on the Board. We believe this signals to the market a lack
of confidence in the Company's prospects by those at the top and
understandably invites questions as to why they collectively own
less than 0.5% of the Company's outstanding shares. To that end, we
believe the Company ought to, at minimum, enter into
well-incentivized employment agreements with each of its named
executive officers and otherwise establish a stock option incentive
plan that closely links pay with performance.
Accordingly, in an effort to provide the Company with the best
opportunity to create meaningful value for stockholders at this
critical juncture, we hereby call on Pharmacyte to immediately
consider reconstituting a majority of the directors on the Board
with highly qualified candidates who would bring fresh perspectives
and an ownership mentality to the boardroom and fill gaps in the
existing leadership's skills and experience.
We hope and expect that the Board will consider seriously our
constructive input and actively enlist the voices of stockholders,
the Company's real owners, in every step of this process to
reconstitute the Board with representatives that will serve the
best interests of all stockholders and unlock the Company's true
potential. While it is our sincere desire to work collaboratively
with Pharmacyte's Board and management team to help improve the
Company and drive value, based on the Board's response and actions,
we are fully prepared to pursue all options available to us to
unlock value for the benefit of all stockholders.
Best Regards,
/s/ Richard Abbe
Richard Abbe
Managing Member
Iroquois Capital Management, LLC
1 Source: Company filings. Percentage decline based
on the price of the Company's shares at which Iroquois Capital's
initial investment made in the Company's offering at $4.25 per share announced on August 9, 2021.
2 Company's Quarterly Report on Form 10-Q for the
third quarter ended January 31,
2022.
About Iroquois Capital Management, LLC
Iroquois
Capital Management, LLC is a New
York-based investment adviser that provides investment
advisory services to Iroquois Master Fund Ltd., a privately pooled
investment vehicle.
Investor Contact
Richard
Abbe
Managing Member
Iroquois Capital Management, LLC
(212) 974-3070
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SOURCE Iroquois Capital Management, LLC