Dear Threaders,
A few more reflections on recent events, and (I hope) a brighter future.
Please recall that these are only one person's opinion - no insider information, no investment advice.
I. Keith Rhodes. There has been much confusion on this Thread concerning Mr. Rhodes -- e.g., why is he still here, if he resigned? All the answers are to be found in the Press Release of December 13, 1996, available on the Home Page (Paracelsian.com, click on Press Releases, scroll down to December 13). At that time, Rhodes was Chairman of the Board, President, and Chief Executive Officer. He resigned as CEO, but retained his other titles. The Office of CEO was established; one-third each Rhodes, Koch and Babish. With the departure of the latter two . . .. But there was no indication that Rhodes would disappear.
Despite his owning a considerable amount of stock, Rhodes is not a "traditional" CEO, a person with transcending expertise in the area. (Think first of CEOs that appear on CNBC; then think of Rhodes merely introducing Babish and Koch during the August conference call, and his (?nonexistent) role at the Smith Barney Conference. From what I can determine, we are very actively seeking a "conventional" CEO, one with the requisite expertise and leadership qualities to launch our products.
II. John Babish. I have no idea why Babish resigned; Paul's scenario seems as sensible as any. I do suspect that his massive selling from the beginning of 1997 exerted powerful downward pressure on the price of the stock. I believe that we have a talented team of "bench scientists" hard at work in Ithaca, and that Alfred Alberts can provide management skills. And his history with major pharmaceuticals could be of great value to us.
III. As I have posted in the past, I both like and respect Art Koch. However, I think he was vulnerable in several ways. (i) He could well have been on the losing side of a power struggle with Rhodes. (ii) He had no independent power base; if I understand SEC filings correctly, he owned a minimal amount of stock. (That fact also explains his not waiting around for an increase in the stock price; he didn't have enough to make that worth while.) (iii) It sometimes happens - especially in small companies -- that an incoming CEO wants to hire his/her own CFO. Taken together, that's serious vulnerability.
IV. Travelers. Yes, it is really frightening to think of a sell-off by Travelers. I cannot say that that is literally impossible; I am not an associate of Jack Rivkin. But think about the scenario. He makes a major investment in July 1995, and discusses it later that month in Business Week. A few months later, he greatly increases his investment. A few months later, Paracelsian is invited to the Smith Barney Conference. And then, only a few weeks after that, even before the company has a chance to launch its first product, he dumps the stock, taking a huge loss, and wrecking the company. What would this do to the reputation of Smith Barney? To the reputation of Travelers? To the reputation of Jack Rivkin? ((If you were the CEO of a development stage company, would this scenario make you want a direct investment from Travelers?)) Again, a sell-off is not impossible - but I can discern no rationale for it. (Sometimes investment funds have to "cut their losses" - but there are no real losses yet, and there is great potential - and selling poses a real threat to reputations, which are of great value on the Street . . . .)
V. The Future. As I see it, we need to be watching for the appointment of a CEO with the appropriate expertise and energy. We need a competent CFO (perhaps part of the CEO package). We need to be watching for "Dr. AIDS." And we will be relying heavily on the talents of Jeff Goodman and Ronald Trahan of RTA for public relations, and the manufacturing, sales and marketing of East West Herbs. The appropriate guidance of Alberts would help. And it surely would be nice to hear about products in the pipeline - especially if they are nearing the spigot.
No one has said it for a while, so I shall: GO PRLN!
Jonathan |
