Dear Threaders,
I could not disagree more emphatically with portions of the analyses of John and Paul.
In my judgement, neither "undercapitalization" (John) nor "government" -- i.e., the FDA (Paul) prevented the launch of Paracelsian's first product -- though management would love to have you believe either hypothesis.
The FDA did not prohibit the launch of AndroCare. The FDA prohibited Paracelisan's making the claim that AndroCare "cured" some specific disease (e.g. AIDS), and prohibited Paracelsian's marketing AndroCare exclusively to a population afflicted with a particular disease (e.g. AIDS). However, it was perfectly permissible for the Company to market AndroCare to the general population as a dietary supplement. And it was perfectly permissible for the Company to publish the results of scientific studies of AndroCare -- even if all the subjects in the study had AIDS. (If those two things would have happened: how long would it have taken for the AIDS Community to add one plus one?)
In the context of the Smith Barney Conference, the Company announced that East West Herbs would handle the production, distribution and marketing of AndroCare. Turmoil at Paracelsian ought not have had any effect on the launch, as it was to be put in the hands of East West. And remember, East West markets in Britain and Western Europe, well outside the jurisdiction of the FDA.
Why was there no product launch?
According to the letter from Keith Rhodes, at the beginning of the 1996 Annual Report, the launch was stopped by the FDA. But:
1. Read the excerpt carefully. The launch is not prohibited. (And again, the FDA has jurisdiction only in the U.S.)
2. According to Karen Jackson, a Vice President of the Company, the FDA letter excerpted is dated April 4, 1997. The Company issued a Press Release on April 23 -- nineteen days later -- blaming resignations at Paracelsian for a delay in the launch (but see above), and claiming that the Company still intended to launch its first product, and that it expected to do so before September 30, 1997.
The Company's statements are deeply inconsistent.
The world-wide market in nutraceuticals exceeds $8 billion. Why has our Company failed to find a way to enter that market?
I believe that current management would love for people to believe that they tried, but failed: they ran out of money, or were thwarted by the FDA. Then investors will go away, blaming their own greed, or their own government. They won't demand answers from the Company, won't insist upon further investigation.
I am wholly unpersuaded. It was not greed that led me to Paracelsian, it was their promise to market products: first as dietary supplements, and then later as "drugs." They have broken that promise, and what they have offered as excuses make no sense.
We should not go away. We should insist upon a clear, coherent -- and true -- explanation of their actions.
Jonathan |
